7 thoughts on “Another Novel Idea”

  1. When I was in the business, there were plenty of consumer advocates and politicians (particularly at the state level), who pretty much wanted to make lenders fiduciaries of borrowers, particularly in the subprime arena. How a lender could do that without destroying the free market in financial services is beyond me.

    Strange that the kind of wrong thinking that got us into this mess–everyone has a right to a home, risk-based pricing is wrong and should be capped, if it’s regulated, everything is peachy, etc.–is even stronger now, after all the evidence has shown how misguided the ideas are.

  2. At the same time we should probably treat lenders like adults too. Which means no bailouts, no free money from the Fed. But what about savers? Ultimately they should be treated like adults too, but is it fair to let the banks go under and have them lose their money?

  3. No argument here. I don’t want to coddle borrowers or lenders. I don’t like seeing businesses or people fail, but better that than politically based largess.

  5. But what about savers? Ultimately they should be treated like adults too, but is it fair to let the banks go under and have them lose their money?

    As a saver, I had a choice on which bank I use. Either a shifty one that offered a higher interest rate or a more stable one with a lower rate.

  6. Reducing risk is what insurance is all about. The government has no business telling anyone the terms in which they can lend their own assets. Let the borrower beware. Let the lenders compete. Let the saver be insured.

    It’s not that complicated… although humans seem to have a love for complication… or a laziness to simplify when the time comes.

  7. The first complication of course is that banks are lending money they don’t have; which is another way of saying they create money.

    Again, this is perfectly fine as long a many banks compete and they are allowed to fail.

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