The subprime lending problem, just a faint blip on the radar a year ago, has snowballed into a full-blown crisis and is the subject of many proposed remedies. Those include legislation to curtail predatory lending, which is generally thought to be one of the factors that led to the issuing of so many subprime loans to borrowers with poor credit. But what is predatory lending? And what are the conditions that make it flourish? “Predatory lending is a term that is used a lot now, but people mean different things by it,” says David K. Musto , a finance professor at Wharton and co-author of a paper titled, “ Predatory Lending in a Rational World ,”with finance professors Philip Bond and Bilge Yilmaz . The paper is an analysis of the theoretical incentives for lenders to issue predatory loans. “What we take it to mean is [a situation where] I make a loan to you that reduces your expected welfare,” Musto says. “That is an example of me being a predatory lender….…