There is a mitigating factor here: the phrase “predatory lending” has its own problems. Such rhetorical aggression is always a gamble, because while it drives its point solidly home it also invites responses ranging from skepticism to outright attack. (Except from true believers, of course, but they aren’t
the ones who need convincing.) So while we don’t have a problem with fighting words, the fact is that such words—even, and this is key, when those words are highly defensible—only stand up with solid definitions behind them. And no one can agree on precisely what predatory lending is.
This combination of a lack of clarity and rhetorical heat meant that much of the press—and especially the business press, which tended to underplay consumer issues already—remained uncomfortable with the term, even after years of use, and so ultimately gravitated toward the far more industry-friendly “subprime.”
In order to understand this submerging of the term “predatory lending” even as the actual practice escalated, we first need to look at where the term comes from. We are aware of business dictionaries, but we think the business press should be speaking the same language as everyone else, so we rely here on the Oxford English Dictionary to give us a quick etymology of the word “predatory.” It is from the Latin
praedatorius, the adjectival form of praedator, which means plunderer. Thus the definition of predatory is “Of, relating to, of the nature of, or involving plunder, pillage, or ruthless exploitation.”
But the OED includes a sub-definition for the business context. Thus we get this 1912 use of the term, the earliest the dictionary provides, from the Trenton Evening Times: “Wrongs done by industrial corporations which are not monopolies … such as … the elimination of competition by unfair or predatory practices.”
If we then scan down to the latest example of usage, from 2002, the target of the word is not other businesses but rather consumers. From Modern Maturity: “A loan company is considered predatory … when it makes a loan that a borrower can’t repay.”
Well, kind of. Looking a little deeper, here are Allen Fishbein and Harold Bunce, in a 2001 article about subprime and predatory lending published by the Department of Housing and Urban Development:
The term “predatory lending” is a shorthand term used to encompass a wide range of abuses. Although there is broad public agreement that predatory lending should have no place in the mortgage market, there are differing views about the magnitude of the problem and even how to define practices that make a loan predatory.
Time hasn’t clarified much. Researchers writing in The Journal of Consumer Affairs last fall noted that vague and competing definitions of “predatory lending” hamper regulatory activity and efforts to track how often the practice occurs. They tell us:
In order to address predatory lending adequately, there needs to be a differentiation between what constitutes abusive lending, predatory lending, and mortgage fraud. Descriptions of predatory lending are plentiful, but a precise definition that would inform regulators and consumer advocates is non-existent.
In an interview with CJR, Lucy Delgadillo, the lead author of the article and an associate professor at Utah State, identified the four traits common to all the definitions of “predatory lending” that she and her colleagues found: 1) It targets vulnerable populations, like the elderly and minorities, who are often poorer and less sophisticated financially; 2) It lends more than than the borrower can be expected to repay; 3) It involves conspiratorial activity between, say, appraisers and loan officers; and 4) It involves the intention to steal, through, say, equity stripping.
This makes sense, but we are still left with the fact that the term is broad and slippery enough to have defied a common definition after more than a decade of use in the national media. The fact is that “subprime lending,” better defined and more broadly accepted, was poised for the press to adopt in a way that “predatory lending” was not.