U.S. subprime laws needed: Toll CEO

NEW YORK (Reuters) - U.S. lawmakers should regulate the subprime mortgage sector to protect borrowers with poor credit histories against predatory lending that has caused a crisis, the chief executive of luxury home builder Toll Brothers Inc. (TOL.N) said on Wednesday.

"I think there ought to be regulation of subprime. I think there ought to be regulation of prime. I don't think that the economy is best left to its own devices almost ever," Robert Toll said at the Reuters Real Estate Summit in New York.

"Left to its own, every industry will sooner or later roll into a monopoly of one kind or another," Toll added.

U.S. lawmakers are considering new rules to address recent problems in the subprime mortgage sector that has provided loans to borrowers with poor credit histories. Lenders are struggling with rising defaults as many variable interest rate loans reset at higher interest rates and U.S. home prices stagnate.

The meltdown has exacerbated the home builder's pain, even though such buyers in most cases account for less than 5 percent of its customers. Subprime loans make up less than 2 percent of Toll's business, Toll said.

"The excesses that are permitted in the mortgage industry can and perhaps have led us into a dark hole," he said, suggesting incentives to push mortgages led some unqualified borrowers to get loans. "With some little regulation, we could stop that kind of excess."

Toll warned, however, that too much regulation could lead to problems of its own.

"For sure, there'll be over-regulation, and that will hurt worse than no regulation, but there is a happy medium," he said.

The Reuters summit is also being held in London and Singapore.