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That interest rate doesn't in any way relieve you of your moral responsibility to pay back that loan, in my opinion, just because you run into financial trouble

by ericd 10y ago

That interest rate doesn't in any way relieve you of your moral responsibility to pay back that loan, in my opinion, just because you run into financial trouble. People defaulting just because it's legal causes interest rates to rise on others, and imposes costs on the rest of society. Of course, it's important for social reasons for there to be legal ways to get out of inescapable debt, but you're not off the hook morally, in my opinion, if you bit off more than you could chew. It's both your fault and that of the lender if you borrow more than you can handle. This isn't usually some freak unforeseeable accident. The 2007 crisis was caused as much by people overlevering themselves to take advantage of a situation as it was by predatory lending practices and greed/fraud at the I Bank level. But people love to put all the blame on the banks, and none on themselves for not being prudent.

tanderson92 10y ago
> It's both your fault and that of the lender if you borrow more than you can handle. Then why does the borrower have moral culpability in addition to financial culpability, while the lender only takes a financial haircut.
- ericd 10y ago
  I think lenders have an ethical responsibility to not put borrowers in a bad position as well.
foobarrio 10y ago
If a bank is making loans at rates that do not cover defaults they should go out of business because they are crappy at their job. If I take my car to a mechanic am I expected to know as much about my car as the mechanic? Do I tear down and redo/inspect any work they do to my car? If I go to a mechanic and ask them if it's okay to do something dangerous to my car and they go ahead and do it, I'd say the mechanic is way more on the hook morally than the idiot driver. Similarly if I go and ask for a 1,000,000 USD mortgage when I'm only making $20,000 USD a year and have no savings or investments and the bank gives it me... You're saying both me and bank are on equal moral footing? You would then have to ask what incentive the bank had to give me the money. Either they are greedy and wanted to charge a super high rate or they intended to pass the buck and sell the loan which can be fraud if they lie about my credit worthiness to the next buyer of the loan.
- ericd 10y ago
  I would say that your asking for a $1M USD mortgage with a $20k income would be reckless at best, and dishonest at worst. Yes, they're also at fault, but you're not blameless in that case. You have a personal and societal responsibility to spend within your means. To do otherwise causes damage to the rest of us.
  - jacobush 10y ago
    It could though cause damage to his social standing by not overspending...
    - ericd 10y ago
      I don't buy it. If your friends judge you based on whether you have a nice car rather than your character and what you accomplish, it's time to get new friends.
ceejayoz 10y ago
> But people love to put all the blame on the banks, and none on themselves for not being prudent. Yes, I blame the supposed experts, not the folks they suckered.
wonderwonder 10y ago
While I agree we should do our best to pay our debts, morality shifts with circumstances. If I have an enough debt where it is affecting the lives and future of my children and I have an option to declare bankruptcy to give them a better life, am I not morally obligated to do so as a parent? I would argue that I am. Morality is a human defined concept. We also only seem to apply it to individuals, a company declares bankruptcy, fires a large number of employees and then rights itself society shrugs but if a person does it we cast shame on them. Life is short, if I dig myself into a whole with the best of intentions, I am not going to spend years living a lesser life and condemning my kids to that same lesser life if there is a reset button.
- ericd 10y ago
  Morality is human defined, but it's the set of ideas that, along with a society's institutions, distinguishes a well functioning society from a corrupt and dysfunctional one. It's the set of memes that allows us to function at the massive group scales that we operate at, that allows us to trust strangers to run things that are vital to our own survival. And when that breaks down, and people start acting in their short-sighted self interest (or you think you see them doing that, anyway), you start seeing that trust crack. I think we've been seeing that happening in the US for a while, and I think corporatism separated from a sense of decency and personal accountability while at work is a large part of the cause. I don't think that it's right for a company to do what you describe wantonly. I absolutely think we should shame companies when they mistreat people. And what you're describing with your children is selfish, but it's an understandable selfishness - your children are of course going to be a higher priority to you than society at large, as it is with almost all parents. Anyway, my idea about the obligations of fulfilling one's debts seems to be an unpopular one, and I'm sure I won't change anyone's mind, especially if they've chosen to take on a lot of debt themselves, so I'll stop here.

by ericd 10y ago

tanderson92 10y ago

> It's both your fault and that of the lender if you borrow more than you can handle. Then why does the borrower have moral culpability in addition to financial culpability, while the lender only takes a financial haircut.

ericd 10y ago
I think lenders have an ethical responsibility to not put borrowers in a bad position as well.

foobarrio 10y ago

If a bank is making loans at rates that do not cover defaults they should go out of business because they are crappy at their job. If I take my car to a mechanic am I expected to know as much about my car as the mechanic? Do I tear down and redo/inspect any work they do to my car? If I go to a mechanic and ask them if it's okay to do something dangerous to my car and they go ahead and do it, I'd say the mechanic is way more on the hook morally than the idiot driver. Similarly if I go and ask for a 1,000,000 USD mortgage when I'm only making $20,000 USD a year and have no savings or investments and the bank gives it me... You're saying both me and bank are on equal moral footing? You would then have to ask what incentive the bank had to give me the money. Either they are greedy and wanted to charge a super high rate or they intended to pass the buck and sell the loan which can be fraud if they lie about my credit worthiness to the next buyer of the loan.

ericd 10y ago
I would say that your asking for a $1M USD mortgage with a $20k income would be reckless at best, and dishonest at worst. Yes, they're also at fault, but you're not blameless in that case. You have a personal and societal responsibility to spend within your means. To do otherwise causes damage to the rest of us.
- jacobush 10y ago
  It could though cause damage to his social standing by not overspending...
  - ericd 10y ago
    I don't buy it. If your friends judge you based on whether you have a nice car rather than your character and what you accomplish, it's time to get new friends.

ceejayoz 10y ago

> But people love to put all the blame on the banks, and none on themselves for not being prudent. Yes, I blame the supposed experts, not the folks they suckered.

wonderwonder 10y ago

While I agree we should do our best to pay our debts, morality shifts with circumstances. If I have an enough debt where it is affecting the lives and future of my children and I have an option to declare bankruptcy to give them a better life, am I not morally obligated to do so as a parent? I would argue that I am. Morality is a human defined concept. We also only seem to apply it to individuals, a company declares bankruptcy, fires a large number of employees and then rights itself society shrugs but if a person does it we cast shame on them. Life is short, if I dig myself into a whole with the best of intentions, I am not going to spend years living a lesser life and condemning my kids to that same lesser life if there is a reset button.

ericd 10y ago
Morality is human defined, but it's the set of ideas that, along with a society's institutions, distinguishes a well functioning society from a corrupt and dysfunctional one. It's the set of memes that allows us to function at the massive group scales that we operate at, that allows us to trust strangers to run things that are vital to our own survival. And when that breaks down, and people start acting in their short-sighted self interest (or you think you see them doing that, anyway), you start seeing that trust crack. I think we've been seeing that happening in the US for a while, and I think corporatism separated from a sense of decency and personal accountability while at work is a large part of the cause. I don't think that it's right for a company to do what you describe wantonly. I absolutely think we should shame companies when they mistreat people. And what you're describing with your children is selfish, but it's an understandable selfishness - your children are of course going to be a higher priority to you than society at large, as it is with almost all parents. Anyway, my idea about the obligations of fulfilling one's debts seems to be an unpopular one, and I'm sure I won't change anyone's mind, especially if they've chosen to take on a lot of debt themselves, so I'll stop here.