MAMEWorld Forums - The Loony Bin - Ugh, how did I get on the side of defending a bank?

Yes, there are times when abuses occur in the free market...

But then so the government should say... let US mess it up for you since you're doing such a good job of messing it up for yourself?

I grudgingly find myself on the side of the banks in this, but your examples aren't good ones for a couple reasons...

Your example of banks trying to bundle and get rid of bad debt... ignores where that bad debt came from. Free markets would not have encouraged the banks to loan to people who were at high risk to default on their loans... but government intervention REQUIRED banks to loan money to high risk borrowers. Your example is just another where government intervention in the free market created the mess.

As far as the credit card rate one... its a 'reasonable' example of abuse and lots of people got caught up in those... of their own accord. Nobody made them borrow money on a card... nobody made them accept a card with such terms of service wherein any late payment would jack up the rate to ridiculous levels. In this case, the government stepped in to save unwary borrowers from their own bad decisions... arguably the 'right' thing to do, but a slippery slope to let the government 'know best' for you.

Better would be for people to learn to 1. Avoid credit card card debt 2. Read their terms of service. 3. Pay their bills on time to avoid the penalty clauses and 4. Don't borrow more money than you can realistically pay back. But, now you don't have to... the government will protect you from yourself... and so Americans are free to run up their cards to levels they'll never be able to pay back... but at a 'fair' rate as enforced by the government. What we need now is more regulation to limit your credit so you don't run it up so high?

At the end of it all, the consumer doesn't HAVE to take out a mortgage they can't afford, they don't HAVE to run up credit card debt they can't afford... but now our government will ~~educate you you to be a smarter consumer~~ enable your bad decisions by requiring banks to deal with your stupidity.

Look what you made me do... now I'm on the bank's side. That's just wrong.

ETA: In thinking about the government interventions in these cases, a better use of government would have been to do a better job of educating the consumer, perhaps by...
1. Requiring a meaningful consumer education course in high school.
2. Require the consumer to obtain a certification before allowing them to borrow money for the first time. Require it again when they borrow large amounts for the first time (mortgage). While it is still an intrusive government intervention, it would create a better educated borrowing consumer without altering the free markets, backing bad loans, bailing out failing banks from bad loans, and rock an economy to its core.

A penny saved is a penny earned.

Edited by Gatinho (10/01/11 05:17 PM)