September 19, 2007

Seems suddenly to have become a sort of offense in itself, and Edward Glaeser warns against the legislative fallout:

For example, Senator Obama's Stop Fraud Act threatens lenders with up to 35 years of prison and $5 million fines if they use any "false or fraudulent pretenses, representations, or promises." Given the vagueness of the term "fraudulent pretenses," I would expect to see millions of borrowers use the threat of prison or the threat of a lawsuit to get out of paying back their mortgage. I would also expect to see lenders shun loans that can lead to such lawsuits. Perhaps, the law should be called the "Stop Credit Act."

Relatedly, Yaron Brook in The Objective Standard offers "The Morality of Moneylending: A Short History".