> There are millions of people who can afford rent, but not pull together a down payment, who would have their options reduced.
This is a non-point, because deposits aren't different from down payments.
> The purpose of banks is to discriminate good loans from bad.
...a purpose which they fail miserably at without government regulation. If government can regulate this, they can just do it. Having greedy corporations constantly looking for loopholes in regulation and then requiring bailouts is not a necessary or desirable part of the system.
governments do not stipulate the action of banks, of 99% of their discrimination policy and process. Regulation operates at a much higher level.
In practical terms, this is all besides the point due to the credit issue.
Would you lend 500k to a drug addict with part time minimum wage work. If so, please go and be the change you want to see in the world.
Otherwise, note that this is the exact problem. prohibition of renting would adversely impact individuals who statistically would destroy value lent to them. Sorting these people is the entire purpose of the mortgage lending system.
Apparently you do need a lesson in housing crises, because pre-2008, banks absolutely would lend 500k to a drug addict with part time minimum wage work. I worked in the industry post-crisis, and absolutely nothing had been fundamentally fixed: the same people who caused the housing crisis were given bonuses, and the attitude was roughly "how can we cut it as close as possible given these new regulations?".
The incentive of individuals within banks is to lend to as many people as you can, collect the bonuses that ensue, and if by some bad luck the loans fail before you get promoted, move on to the next job. If the loans fail systemically, then your entire bank gets bailed out, you still collect a bonus, and you don't even have to find a new job. There is no level at which there is any reasonable incentive to perform any of the "discrimination policy and process" you think exists: the only reason that happens at all is because of regulation, which is why I say that if the government can regulate it they can just do it without involving people trying to find loopholes. Sure, some banks lend responsibly, but sans regulation there would always be some bank willing to lend to anyone, which would fail every few years and get replaced with the next bank with the same problems.
And when the banks got bailed out, who took that risk? Instead of trying to reason about how you think things would work in your ideological model of the world, why not look at what has actually happened?
Oh and just to circle back to the original point: landlords are far better than lenders at filtering out drug addicts with part time minimum wage work, because they actually have incentives to protect their properties from destructive tenants or tenants who might not pay and be difficult to evict. So let's not pretend you're deeply concerned about the plight of the drug addicted part-time minimum wage worker. There are very few places in the US where full-time minimum wage pays rent (and those minimum wages got that high against the wishes of people like you). If someone on minimum wage lives in an apartment it's because of housing assistance, so again I wonder why you insist that landlords are a necessary middleman to government-provided housing.
This is a non-point, because deposits aren't different from down payments.
> The purpose of banks is to discriminate good loans from bad.
...a purpose which they fail miserably at without government regulation. If government can regulate this, they can just do it. Having greedy corporations constantly looking for loopholes in regulation and then requiring bailouts is not a necessary or desirable part of the system.
Do we need a history lesson in housing crises?