Quote:
Originally Posted by ThurgreedMarshall
Yeah. Both you and Sebby are correct. In a bubble atmosphere, when everyone from the Borrower to the mortgage broker to the local bank to the investment bank to the ultimate cdo investor believes that real estate values will never decrease, it is understandable for Borrowers to take on more than they would normally. And, even though Sebby views this with the benefit of hindsight, people should have understood that you shouldn't borrow huge amounts of money just because you can. I just think that if you look at both sides, it makes more sense to regulate the assholes paying themselves huge bonuses to pass risk along to the next guy than to think ordinary people will educate themselves into not taking easy money being offered to them.
TM
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We absolutely need to regulate the banks. My thinking was, why not at the same time make an effort to educate consumers?
I think we need a new form of "home economics" in schools. Kids need to be taught about finance and economics early in their educational careers. This will go a long way toward helping them make better decisions on things like borrowing more than they ought to in student loans and for housing, both of which are a big part of the debt overhang vexing demand.
That and Adder's suggestion: Make the borrowing contracts idiot simple. Warren's suggestions in that regard are well made. That's one area where I think she has been valuable.
ETA: Where we disagreed was my view that banks should be lightly regulated in regard to transactions between each other. I see your point about how allowing a carve out for sophisticated parties invites disasters involving pension funds, etc. I think ours is a difference in terms of degree. I don't know where the line should be exactly, but I favor light regs, increasing if/as events dictate necessity. My guess is, you favor strong regs now to avoid having the problems that would lead to a need for enhanced regs.
