Economics is ultimately about information, as was pointed out by the
2001 winners of the Bank of Sweden Prize in Memory of Alfred Noble.
Markets do not function the way Adam Smith envisioned because people
have asymmetric access to information. Here there are two asymmetries -
bank executives do not have information about the harm they cause, and
victims of predatory lending do not have information about the fees and
penalties associated with loans.
I'll leave it to one of the local businesspersons who no doubt are part
of this forum to explain how various factors (community responsibility
versus dollars and cents) are weighed differently by them than by
corporations headquartered thousands of miles away. But I guess I just
have a little more faith than you do that when people are not protected
by anonymity, they are more likely to do the right thing.
The banks could be content with normal profits rather than the nearly
40 percent profits posted in the predatory lending industry. It is a
complete myth that the rates charged by predatory lenders are
necessitated by risk. In fact, Wells Fargo charges different rates to
people with the same credit rating depending on where the loan is
originated.
As to your continued repetition of the meaningless slogan that
education is the answer, I point out again that this is about
deception. It is saddening that anyone would want to put the burden on
those who are trying to put food on the table (as Wizard Marks points
out) rather than on unethical businesses engaged in predatory behavior.
Becca Vargo Daggett
Done for the day in Seward - sorry to cheat with this third post -
sometimes even lack of anonymity doesn't get people to follow the rules
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