UnThreaded | Threaded | Whole Thread (35) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 741516  
Subject: Re: Here We Go Again: CRA Back From the Dead Date: 1/25/2013 3:59 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
The goverment can't see into the future. How is the government supposed to know what companies are doing behind the scenes? What schemes they're concocting? Credit default options is one of those schemes.

Government is perfectly capable of asking economists and psychologists what incentives a possible change in law or policy will create.

When California was drafting its "deregulation" of it electrical-power network, economists looked at the draft and predicted a number of abuses that would be perfectly legal under the proposed new rules and would create severe financial difficulties for California utilities. They enacted the law anyway. Those abuses occurred and several California utilities had severe financial difficulties.

When Obamacare was being drafted, people looked at pieces of the draft as they were released and predicted that medical-care insurance prices would rise and doctors would retire at a higher rate. Some went so far as to predict that a lot of part-time employees would see new limits on the hours they would be permitted to work and some full-time employees would be forced to either go part-time or find new jobs. That's happening.

It doesn't take a Ph.D in economics to determine that if you demand banks make mortgage loans to people who don't meet normal lending criteria, the banks will be making lower-quality loans and more of those loans will go into default. Or that the additional money flowing into mortgages will drive housing prices up. Or that the bankers will seek ways to protect themselves from the mortgages they wouldn't have made on their own by foisting the risk off on someone else (and preferably getting that someone else to pay them for the privilege). But the government failed to make any allowances for these entirely predictable things.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (35) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

Post of the Day:
Apple

Apple and Ninety Years Ago
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement