January 06, 2010
Pulling the Plug on Grandma’s Bank Account

Ezra Klein pointed me to a truly great post by Mike on Rortybomb. The lede is below, but for the truly great part, follow this link:

In late November I talked about how credit cards specifically, and the consumer financial system more generally, was fee- and ‘trick and traps’- based and how that amounted to a transfer from the poorest to the richest in our country. I found this to be a really bad thing, one that gave terrible incentives to financial firms to find innovations that would make prices and information more opaque and less transparent for consumers.

Instead of challenging the argument itself, or arguing that this system was a necessary evil to get the poorest in our country access to financial markets, I was amazed at the amount of feedback I got that argued this was a great system, because instead of ripping off the poor to give benefits to the rich, it really transferred “from the ignorant and foolish to the informed and prudent,” or as one emailer put it, in a manner representative of many other emails: “It’s the irresponsible borrowers – who are often poor – that are penalized and the ultra-responsible borrowers that are rewarded. I fail to see the problem there.” The argument is that the system works to punish those who are cognitively weak and financially irresponsible and reward those with good cognition and a sense of responsibility…

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Posted by Jerome Doolittle at January 06, 2010 11:49 AM
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Baby-boomers won't lose their investments due to dementia. They've already lost their investments, even the net worth of their real estate.

Posted by: Joyful Alternative on January 9, 2010 3:49 PM
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