DOES THE GOVERNMENT THINK YOU’RE STUPID? OR A CHILD?
My latest AIP column is up and it deals with the passage in the House of the Consumer Finance Protection Agency (CFPA) and how another alphabet soup agency will protect us from our own stupidity.
I am often vexed lately when reading what our government is doing. On the one hand, I find it hard to fault the intentions of those who wish to make our lives “easier.” On the other hand, I want to throttle them for insulting my intelligence by proposing to do something for me that any reasonably aware 10 year old should be able to do for himself.
If the modern welfare state teaches us anything, it is that we must be cocooned and protected as if we were a newborn babe, or prevented from harming ourselves because we’re too stupid to know any better. It’s not enough that government warn us that the stove is hot. They must put on oven mitts for us and then place a 10 foot high sign in front of our face telling us not to touch anything.
I get this feeling of being patted on the head and told I’m a good boy when reading about the brand new Consumer Finance Protection Agency (CFPA) - another in a long line of alphabet soup government watchdog agencies who are ostensibly set up to protect us from rapacious corporations who would do us harm. And, as you might have guessed, the CFPA has also been constituted to protect us from our own stupidity.
In this case, it will be financial products from which we will be spared the consequences of any irresponsible, ill-informed decisions we might make. The stated reason is to prevent another financial meltdown like the one that occurred a year ago.
I am not against financial regulation - far from it. I am against government taking it upon itself to act as a knight protector against our own ill informed, lazy decision making.
There are already laws on the books to deal with unscrupulous mortgage consultants, crooked brokers, and other get rich quick schemers who don’t make any headway against those who conscientiously review and examine documents, ask questions, and generally take personal responsibility for their own decisions in financial matters.
If the crook lies, or misleads, he and his firm are not only liable for criminal penalties but losses can be recovered in civil court. The point being, we don’t need a whole new agency that will end up stifling financial innovation by limiting who can purchase complex financial instruments, while forcing financial institutions to offer “vanilla” products to consumers they feel are not savvy enough to understand risk.
Buying a mortgage is not rocket science. Sue and I took a night off from watching TV to read every word of the agreement, draw up a list of questions, and would not sign on the dotted line until every one of our concerns were met and questions were answered. We spent an hour with our insurance broker so that we completely understood that aspect of the purchase.
The potential for abuse by this agency is astronomical (the power to investigate and punish will be in the hands of the director - a political appointee). And there is the probability that fewer people will be able to get mortgages because the seller will not be able to offer a wide variety of solutions in order to get a customer into a home.
Credit cards are a different story, and I wholeheartedly endorse reforms in that area. But do we need a new agency for that? Or would common sense legislation that would prohibit industry practices that costs consumers and merchants billions of dollars in unnecessary fees be adequate?
The CFPA is good government gone wild. We don’t need it, and it should be defeated in the senate.
Financial innovation. This is another way of saying, lets put an addition on the house of cards.
Comment by Chuck Tucson — 10/28/2009 @ 9:59 am
Wait a minute, I thought conservatives argued precisely that the people who ended up underwater or signed lousy deals were stupid. That thy had been foolish. Responsible, but stupid.
Isn’t that a big part of why the country almost went 1929? That people were stupid enough to sign mortgages they couldn’t pay? Wasn’t that a key theme as conservative politicians bobbed and weaved and tried to avoid taking any responsibility?
The problem is not outright fraud, it’s deceptive practices. It’s using endless documents full of legalese to baffle and confuse the suckers. Not everyone has a lawyer to interpret. And the assumption by a lot of people is that the financial institution wouldn’t give them a mortgage they were unable to pay.
Blaming the customer for failing to understand deliberately obscure deals written in deliberately obscure language makes no more sense than demanding that patients read their own charts and take responsibility for all medical decisions.
Possibly the very last thing we need right now is a lot of clever, clever financial innovation. These masters of the universe just innovated us into disaster and had to be rescued by the taxpayers.
Comment by michael reynolds — 10/28/2009 @ 10:54 am
Michael Reynolds, you are absolutely 100% correct. I’ll even take that a step further though, and throw in the amazing “Financial Innovation” called the No Income, No Asset Verification Mortgage.
Imagine the surprise of the financial institutions when they basically said, come on in, lie to us, and we’ll give you FREE FUCKING MONEY… (for a commission, of course) and people actually came in and did it.
There’s your financial crisis right there. Oh, but lets blame the people for taking the money. What the hell difference does it make though, as long as everyone up the chain got their commission on the mortgage, or, further up, their financial innovation.
Give me some time though, and I’ll figure out a way to blame ACORN for this.
Comment by Chuck Tucson — 10/28/2009 @ 11:48 am
Since there are so many “laws on the books” already to discipline the wrongdoers, then perhaps we ought to be digging those up to punish those whose cruddy business practices have led tens of thousands of people to be foreclosed upon, some of whom must be victims not only of their own ignorance or circumstance, but also of fraud. What’s that you say? Those people should just wait in line while one or two overworked States Assistant Attorneys General “look into it”? Great solution. Meanwhile, people are literally kicked to the curb.
The banksters have proven, yet again, that they cannot be trusted to self-regulate their behavior or treat their customers as anything other than foie gras geese to be stuffed with garbage until they pop. Just the threat of “some agency” telling them what to do MIGHT get them to straighten up.
Comment by Marge Gunderson — 10/28/2009 @ 1:58 pm
DOES THE GOVERNMENT THINK YOU’RE STUPID? OR A CHILD?
False dichotomy. The government thinks we’re both.
Comment by Locomotive Breath — 10/28/2009 @ 7:12 pm
I always felt that the problem with liberalism is that:
It treats adults like criminals,
criminals like children, and
children like adults.
Nanny-statism is along the same lines. Govt = Daddy, so eat your veggies and let Govt tell you what to do - infantilization of laws.
Comment by Travis Monitor — 10/28/2009 @ 9:38 pm
Govt = Daddy, so eat your veggies and let Govt tell you what to do - infantilization of laws.
Yeah, I hate that. Like when some people think the government should decide whether a woman can get an abortion? Or when the government decides who can and cannot get married? Or when government tells people what words they can use on the radio or TV? Or when some people think government should have an unfettered right to listen to your phone calls?
That’s like, so liberal and all.
Comment by michael reynolds — 10/28/2009 @ 10:21 pm
Yeah, I really hate it when the government tells me what plants I can grow in my garden for my own personal use. Or what should or shouldn’t show up in my bodily fluids.
Danged libruls are always infriging on my personal space and freedoms as an American.
Comment by Marge Gunderson — 10/29/2009 @ 9:42 am
Of course, the government has to treat subjects as stupid: paternalism is the best, most agreeable way to expand the government regulation
Comment by Dan @ Israeli Uncensored News — 10/31/2009 @ 3:54 pm
Though the years it didn’t matter whom was president of which party, government has tried to tell us what to do, so why do we blame whichever party is in the white house at the time? Also, the tea baggers and the like don’t realize thay are doing the same as the radicals did in Russia, that created communism, and same who gave hitler the boost he needed and created nazism. True republicans have taken a back seat to the ones who are creating their own party . What ISM will they create and we find ourselves isolated like Germany and Russia?
Comment by Maddie — 11/6/2009 @ 8:10 am