The Atlantic | Megan McArdle | Mortgage BloggingJust wanted to post this because I thought it was a good follow up to last night's post about how the government tries to justify its policies by fitting them into neat buckets like "child safety," and denying there are other considerations. "Consumer protection" is another one of those buckets.
I don't know that we're striking the wrong balance; I don't need a quarter point lower rate so badly that we should expose millions of unsophisticated homebuyers to danger of being cheated. What worries me is that there's little recognition that we have to strike a balance--or for that matter, even that there are tradeoffs. Everything that ever disadvantaged someone is automatically assumed to be a terrible product feature that ought to be eliminated. That instinct is what most worries me about the new CFPA.
I would feel more confident about the people designing our massive edifices of legislation if I knew they had ever successfully designed other things. My second engineering projects as an undergrad was designing, analyzing and testing a plastic bridge. You learned very quickly that you could not make categorical claims like "this bridge design is strong," "this bridge design is light," or "this bridge design is safe." Safe under what load? Strong compared to what? If you make it lighter by X grams how much strength do you sacrifice? Etc. There are trade offs.
Do you trust many congressmen to build a good erector set bridge? If they can't handle something that simple, why do we trust them to redesign the financial system?