THE BOSTON Globe finds it "astonishing" that the Fed has to force lenders to do what they used to do out of simple self-interest - lend only to credit-worthy applicants ("An addiction to borrowing . . .," Editorial, July 27). However, the editorial fails to examine how government regulation has perverted what is in banks' self-interest.
Our banking industry knows that it doesn't have to worry about the downside of lending to unqualified borrowers. Because of
It wasn't always the case that banks could depend on the government using taxpayer dollars to pay for their bad decisions.
Government regulation made it in the self-interest of banks to try to sell credit to consumers without worrying about their ability to pay.
What is needed is not more regulation; we need to undo the damaging regulations that twisted lending incentives in the first place. Laws against fraud and other crimes are already available to punish dishonest practices. Government should cease economic regulation of banks, and let banks suffer the full economic consequences of the lending and investment mistakes they make.
PAULA HALL
Brookline
CHUCK TURNER and Merelice ("Fighting the foreclosure crisis," Op-ed, July 29) seek to bail out "people who are the backbone of their communities," despite the irresponsible borrowing of these same people, which has in part caused the mortgage mess.
The Business section of the same edition of the Globe ("Foreclosure-plagued cities gain sales") pointed out that Brockton and Lowell have seen "surprising sales gains" by those "eager to purchase houses being sold by banks that seized properties from delinquent borrowers."
The market will take care of itself. And if Turner and Merelice are going to get involved, they should at least get their terms straight and stick with "mortgagor" and "mortgagee," rather than introduce the new and mysterious hybrids, "lender/mortgager" and "borrower/mortgagee."
TOM FROTHINGHAM
Waban
