Of course, this totally ignores differences in, say, math ability between lenders and bottom-of-the-barrel borrowers.
Yet, while I think the concept of "predatory lending" has some merit, especially in areas such as credit card lending, it's mostly throws us off the scent in figuring out the subprime mortgage disaster.
After all, the point of making predatory loans is to extract a stream of high monthly payments from the borrower. But the point of originating worthless mortgages was not to get paid back a lot of money over the next thirty years (many borrowers wouldn't last past the two year teaser rate period, and by 2005-2006, a fair number of borrowers never made more than one payment -- what economists Haughwout, Peach, and Tracy of the New York Fed jocularly refer to as "juvenile delinquent mortgages"). No, the point was to extract a high payment now from credulous saps to whom you sold the dubious mortgages.
What hundreds of anecdotal accounts show is a process often involving collusion between the borrower and the originator of subprime mortgages to defraud institutions farther up the financial food chain by selling them garbage.
We had a ridiculous system in which big investors let themselves get duped by small grifters. The borrower 100% knew he wasn't making the $132,000 per year he put down on his mortgage application. The mortgage broker was 95% sure the stated income figure was a lie. The storefront mortgage broker's boss was 90% sure. The loan officer at Countrywide who bought the loan from the storefront mortage sales firm was 75% sure. The Countrywide salesman who securitized it into mortgage-backed security and sold it to Fannie Mae was 50% sure, while the Fannie Mae buyer was 25% sure, while his boss was 10% sure. The Fannie Mae CEO just assumed that the Law of Large Numbers was magically going to make his risk disappear through diversifying. Just diversify the diversity and it's all good!
Of course, many financial firms then played a game of Hot Potato with each other, repackaging the garbage loans and selling them on to rich but but even more clueless folks, or insuring themselves with AIG against losses.
Thus, the term "predatory securitizing" may be more useful for describing much of what happened during the Housing Bubble than "predatory lending."
A Google search shows that nobody has used the term "predatory securitizing" before, and only a handful have used "predatory securitazation." I would prefer the former version -- "predatory securitizing" -- since it's in the same format as "predatory lending."