Credit in America: Part 2

While the housing bubble has not entirely popped and the negative effects of the rapid overheating of the housing market will still be felt for sometime, the worst of the the popping of the bubble is over.

However, the credit crunch is an entirely different beast. The article here is about the credit crunch and it re-sparked my interest in the current credit situation.

What can we do to solve the credit crunch? Obviously, credit has become all too easy to get, with so may different types of credit options such as neg-am, subprime, etc that allow even people of lower socioeconomic and thus lower credit scores to obtain loans. While I believe that credit should be available to people of all socioeconomic statuses, credit is too easy to obtain.

The Federal Reserve of last year noted that consumer credit debt is around 11 trillion dollars. That's a lot of money not being paid back. This strain is felt by the families in debt possibly going to bankruptcy, by the lending institutions who have to pay the costs, and the economy as a whole.

It's a lose-lose situation.

So what do we do?

1. Enact usury laws.
2. Actually enforce our the pre-existing laws we have to prevent corrupt lending techniques
3. Tighten credit standards so that consumers who won't be able to pay back won't get the loans to begin with.
4. Install a government program to give credit with little to no interest topeople with lower socioeconomic status based on willingness to work so that they can get the basic necesities to establish themselves in a location.
5. Make a law so that banks and lending institutions better explain their loan programs to consumers and help them plan a fiscal plan to make sure they can pay back the loan in a timely fashion.