As fallout from the subprime lending crisis continues a number of remedies have been proposed to deal with it. One is legislation to curtail predatory lending which is generally thought to be a factor behind the issuing of so many subprime loans to borrowers with poor credit. What qualifies as predatory lending? And what are the conditions that make it flourish? Wharton finance professors David Musto Philip Bond and Bilge Yilmaz analyze predatory lending in a new paper titled ”Predatory Lending in a Rational World.”
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