[quote=“KenTaiwan98”]Sense is prevailing finally in the banks.
I wonder why anyone thought they would be a great idea.
Kenneth[/quote]
Well, the banks thought they would be a good idea. There’s much profit to be gained in getting Joe Taiwan up to his eyes in debt. He can then spend the next 10-20 years drip feeding a proportion of his salary to the banks, providing them with a steady revenue stream.
Joe Taiwan won’t have so much to spend on other things, and his family may disintegrate as a consequence, but that’s not the banks’ problem. That’s what regulatory authorities are for. And the consequences of excess consumer debt have precedents elsewhere. The government’s response was slow. But then it has significant direct and indirect stakes in the banks, so it’s coffers will benefit. Think of it as an indirect tax on those who who want the privilege to live larger now and pay for it later.
I think it’s not that people don’t see they’ll have a problem paying off 250k when they earn 35k/mo, it’s just that they get caught up with keeping up with their peer group in possessing stuff and can’t stop.