Friday, September 17, 2010

Speak for Yourself

On Thursday, the Chronicle Editorial Board admitted that it is irresponsible and would prefer for government officials to be their nanny. Granted, they didn't use those words, nor were they so explicit, but that was the meaning of an editorial titled "Dollars and sense: Why do banks fear Elizabeth Warren? Because she's on our side." What the editorial does say is:
The bank gets to make unilateral changes to our contract, and we don't. The bank has a staff of Ivy League-educated Masters of the Universe to dream up new fees and tricky ways to disguise interest rates, and we have about eight minutes, between getting home from work and making the kids' dinner, to decipher the mail. No surprise: The bank wins.
Unwilling to spend more than "about eight minutes" dealing with its financial matters, the board would prefer to grant a government official expanded powers over financial institutions.  Unable to understand the contracts that it signs, it simply throws its hands in the air and naively believes that regulators will protect them. Just like those regulators prevented the housing bubble and the meltdown on Wall Street.

It would be fine if the editorial board wanted to cede control of their finances to someone else. What isn't fine is that it wants to force everyone else to do the same. They project their own inadequacies on the rest of us.

The Chronicle would have us believe that the financial crisis was caused because individuals are too damned stupid and greedy to be trusted to make decisions without government oversight. The Chronicle would have us ignore the fact that government officials are individuals, and they can be just as stupid as anyone. In fact, given the state of the economy, a very good case could be made that they are more stupider.

But this isn't about intelligence. It's about power. Just as health care "reform" was a blatant power grab, financial "reform" is an attempt to seize more control over the economy. That some--such as the paper's editorial board--would willingly give away control over their own lives goes a long way toward explaining the success of those attempts.


Mr. Moderate said...

The government should be able to create a regulatory framework where both sides have an equal opportunity to make decisions on the contracts they enter. That would generally mean the banks have to make it clear what's happening, ie no tiny font paper in the bill that looks like an ad, and most important;y, require that the agreement be signed by the customer. No more "absence of a response will be deemed acceptance". All agreements must be written in clear English.

I understand you find all regulation abhorrent, but that's not realistic. Regulation provides a framework for commerce to operate fairly, preventing one party from taking advantage of another. The most important role of regulation is to maintain a level playing field, where the companies that are decent don't lose out to the companies that appear to be a better deal bu later turn out to be evil scum.

Brian Phillips said...

What is wrong with individual responsibility? If you don't understand a contract, don't sign it. If you don't like the terms, find another company to do business with.

Regulation does not create a "level playing field" or prevent fraud. If it did, how do you explain Madoff or myriad other frauds that regulators missed?