Role Of GSEs And Other Factors That Affect Money Lending Market

Money lenders were present in all ages but it seems that every age has its own Shylock that is blamed for the economic problems created. In the olden times it was Shylock for his famous ‘pound of flesh’ concept and a couple of decades ago it was Michael Milken for his ‘junk’ bonds concept. Over the years it is now the mortgage bankers.

You will find hundreds of thousands of homebuyers who have taken out a loan to buy their dream home are now delinquent on their loans. This is now termed as the ‘sub-prime mortgage crisis.’ This has not only affected the mortgage loaning market but has also affected negatively the broader money market as well as the entire economy of the country.

Most people think that the blame should be on the borrowers but on deeper investigation and precise analysis it is found that the villains are actually the money lenders. It is for their approach and business policy that have resulted in so many innocent borrowers to end up as delinquent customers and still struggling with their damaged credit scores. It is found that the money lenders actually deceived the borrowers while making the loans or they did not have a fair knowledge before making the loans.

In the future if such problems are to be avoided then it is required to have a strong clamp down on the money lenders, their money lending industries as well as their business policy. Few experts and market critics even suggest criminal prosecutions after a thorough investigation on each. Few even go a step further to suggest implementing heavier regulations on the bankers as well.

Attitude towards money lenders

If you go through the history of money lending, you will find that there are evidences aplenty right from the ancient times to this modern age where it is seen that the attitude towards money lenders was nothing but bad. There are several reasons to it. Of course, the government policy over the decades was to encourage the money lenders to provide mortgage loans especially to the lower income families to give a boost to the real estate industry in turn.

  • However, the mortgage brokers found it to be discriminating and refused to make such loans. However, the stronghold of the government has changed now significantly and the politicians lash and leash the money lenders. This has taken most of the money lenders in a bind.
  • As for the millennia, the money lenders have always been marked as the primary scapegoats and such a treatment of money lenders maybe unjust but it is not new. They are blamed for every economic problem practically and have been derided by many since ages. The list includes the philosophers from the ancient days as well as the religious authorities.
  • It is found that the properties of the money lenders in the past were either confiscated by the powers that be to compensate the victims they made or have been humiliated, framed, butchered or jailed.
  • The Jewish pogroms destroyed the records of debt and few went further to vilification of the House of Rothschild. The American financiers and money lenders were jailed and have been the targets of philosophers, journalists, theologians, economists, legislators, playwrights, and even the masses.
  • If you consider the major thinkers over history such as Plato, Aristotle, Karl Marx, Thomas Aquinas, Adam Smith, and John Maynard Keynes to name just a few, all of them considered money lending to be a major voice at least under specific conditions. As for the writers, right from Shakespeare, Dante, Dickens, Dostoyevsky, and even the modern novelists, all depicted money lenders as villains in their works.
  • However, today in the age of globalization you will even find the anti-globalization demonstrators carrying signs that read ‘abolish interest’ or ‘abolish usury.’ Though these protestors are considered to be typically leftists who oppose capitalism and anything in between that is associated with it, the contempt for money lending cannot be overlooked.

In short, this condemnation is shared by all others, including the radical Christians and Muslims who think that lending money and charging interest on the sum lent is an act that violates God’s law and therefore should be termed and an immoral act, if not a crime.

The consequences and meaning of money lending

You may tend to think that what the consequences of all these denunciation were since you still get money lenders in every look and corner. You do not even have to visit any brick and mortar office or meet a lender in person. You can visit sites such as and get instant approval and your desired loan amount wired within a very short time. Money lenders also have a bigger role to play.

Usually, the term ‘usury’ is often considered to mean ‘excessive interest’ however this is never defined. Few even consider it as illegal but the actual definition of the term according to the Oxford English Dictionary is completely different. It suggests that it is a ‘practice’ of lending money on interest.

It is an agreement between two persons for a fixed period of time called the loan tenure. As per the agreement, the lender does not have any restriction or control over the use of the money by the borrower and return the amount borrowed within the time limit along with the premium agreed upon.

Both the parties involved benefit from such exchange of money. The borrower gets access to the desired products or services and money lender earns an income by lending the excess money they have in the form of interest that would have sat idle otherwise.

Actually, the money lenders serve the commerce and industry of the country in almost every sector. In the past, they helped in trade and commerce along with backing new merchants for overseas trade. This in turn resulted in exploration of the New World and colonization.

They also helped in gold and silver mining operations, fueling Industrial Revolution, and in the late 20th century they financed the telecommunications, computer, and biotechnology industries.