Irresponsible Lending, Spending and Borrowing

August 30, 2009 by  
Filed under Debt & Credit Free

One of the major criticisms of banks which emerged as the extent of the global credit crisis became clear to everyone was that they lent money irresponsibly to too many people. Most of us, if offered the chance to have a spending pot of more money than we earn in a month, would be sorely tempted. And maybe that is the problem. There are those who argue that credit should only be given to those who can show they don’t need it. While this is a tad harsh (short term borrowing can be a responsible solution in some cases), it might at least be argued that credit should only ever be given to those who have never abused it in the past.

Part of the problem is that banks saw fit to speculate on the continuing boom in the global economy and felt that by lending to people who were looking to become upwardly socially mobile they could cash in on those people being successful. However, for some potential borrowers it became clear that banks were taking risks and lending to people who had little hope of comfortably repaying the debt. Knowing that some contingency has to exist for these eventualities, people took advantage of this profligacy to take out big loans and enjoy a short-lived period of financial windfall – knowing that even when the money ran out they would simply be back to living the life they led before. Banks seem to be learning the lesson – but look at what it took for that to happen.

Related Articles

  1. Ferret Hunting - Spending A Lazy Day Off With The Pet
  2. Peer to Peer Lending ? are You Looking to Start a Business
  3. Home Equity Loans: Abusive Lending and How to Avoid It
  4. Is a Loan the Way To Go?

Trackbacks

  1. Six Pack Exercise- Are You Spending Too Long on Exercise for a Six Pack?
  2. Why Did HUD Raise The Mortgage Insurance Premium For FHA Loans?
  3. Mortgage Loan Calculator: Mortgage: Mortgage loan: Federal takeover of Fannie Mae and Freddie Mac: Real estate appraisal: Subprime lending: Adjustable-rate mortgage

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!