Gotta love the socialist doublespeak...

[armor99]

Ok.... the article below really annoyed me... especially this little gem...

"We aren't saying that lenders shouldn't make a profit. And we aren't saying that we borrowers aren't responsible for our own choices. We just want transparency and safeguards against faulty financial products."

http://finance.yahoo.com/banking-bud...-to-Washington

This reminds me of a conversation that I had a while back with a VERY far left leaning person. He proceeded to tell me that the american people should be allowed to vote on how much profit the CEO of a company can... and cannot make. The above statement is a having your cake and eating it too arguement. Lenders are in business to MAKE a profit.... not because it makes them feel good, or because they feel some sort of social imperitive to lend money to people. So... if the govt gets involved trying to limit how much profit they are allowed to make then in very short order there will not be any lenders anymore...

[ERD50]

armor, don't want you to think this is going unheard. I read the article, interesting - just haven't formulated a response yet. Every time I think of it, it's five pages long.....


What the heck - I'll take a stab at just one (representative) line in there:

You've allowed our kids to get sucked into the debt culture before they've even gotten a job to pay the bills.

This whole article is of the "poor victim" variety. Geez, TALK to your kids about CC and debt. IIRC, doesn't a parent need to co-sign for a minor?

I guess I should go ask the Govt to shut down the Mercedes dealer. I see those shiny cars, I really can't afford them, but I *want* them. How can they be *allowed* to sell something that might be bad for me?

I guess my next four pages would be more of the same, so that'll do

-ERD50

[ERD50]

Originally Posted by armor99

Lenders are in business to MAKE a profit.... not because it makes them feel good, or because they feel some sort of social imperitive to lend money to people. So... if the govt gets involved trying to limit how much profit they are allowed to make then in very short order there will not be any lenders anymore...

Nah, they'll just go to the loan shark Guido in the back alley. Try regulating *that*!

Now Guido, what is this on page 13, subsection A, about a prepayment penalty?.....

-ERD50

[FinanceDude]

Originally Posted by ERD50

Nah, they'll just go to the loan shark Guido in the back alley. Try regulating *that*!

Now Guido, what is this on page 13, subsection A, about a prepayment penalty?.....

-ERD50

"You pay early, you get your knees broke, got it"??

"Now FORGEDDABOUTIT"!!!!!!!!

[armor99]

Originally Posted by ERD50

Nah, they'll just go to the loan shark Guido in the back alley. Try regulating *that*!

Now Guido, what is this on page 13, subsection A, about a prepayment penalty?.....

-ERD50

Actually even ment as a joke... it really is not. Almost every socialist country has a thriving black market. Why? Because people need to turn to it just to survive. Think of that... a society in which you need to cheat and game the system just to survive. Now that does not sound like a place I would want to live... And how does that black market function Via capitalism of course. I find it interesting that in the absense of law or govt a capitalist system will amost always arise by itself....

[Abreutime]

This is what has arisen in the illegal drug market: a thriving black market filled with economic incentives, risk-based pricing, and costly enforcement (protection). Who are the beneficiaries of the drug laws?

[unclemick]

Originally Posted by Abreutime

This is what has arisen in the illegal drug market: a thriving black market filled with economic incentives, risk-based pricing, and costly enforcement (protection). Who are the beneficiaries of the drug laws?

Tatoo Parlors??

heh heh heh -

[ERD50]

Originally Posted by armor99

Actually even ment as a joke... it really is not. Almost every socialist country has a thriving black market. Why? Because people need to turn to it just to survive. Think of that... a society in which you need to cheat and game the system just to survive. Now that does not sound like a place I would want to live... And how does that black market function Via capitalism of course. I find it interesting that in the absense of law or govt a capitalist system will amost always arise by itself....

You are right - it was thrown out as a joke, but it really does form the basis for a parable on the subject.

The people who react emotionally to things like "payday loans" (they are taking advantage of these people - we have to stop them!) seem to fail to consider the consequences. If those people can't get a loan from a storefront, they WILL go to the back alley.

Did that improve the situation? No, it made it worse. But never mind, we spent time writing, debating, enforcing this law, just to drive it all underground. We feel so good about our accomplishments! Pat us on the back for appearing to help the little guy!

Maybe the little guy could be helped more with a little basic financial education?

-ERD50

[. . . Yrs to Go]

Originally Posted by armor99

He proceeded to tell me that the american people should be allowed to vote on how much profit the CEO of a company can...

Nope. Some random person shouldn't have a say in what a CEO can make. But shareholders should. And they don't.

[youbet]

Originally Posted by . . . Yrs to Go

Nope. Some random person shouldn't have a say in what a CEO can make. But shareholders should. And they don't.

Actually they do have a say, but just don't bother. They elect the BOD who hire and pay the CEO. Shareholders need to speak up, give their votes to maverick directors and take the time to act like owners of the company.

[. . . Yrs to Go]

Originally Posted by youbet

Actually they do have a say, but just don't bother. They elect the BOD who hire and pay the CEO. Shareholders need to speak up, give their votes to maverick directors and take the time to act like owners of the company.

Umm yeah, except the board of directors is typically stacked with people picked by management and shareholders are generally not able to select their own people. They get an up or down vote on the board management presents to them. It's democracy Iranian style.

[youbet]

So, how to you propose that shareholders have more of a say in CEO pay?

[clifp]

It seems to me that the most broken area in America is shareholder power.
Most individual (including me), mutual fund, pensions, and other institutions punt on proxy votes, and take no interest in corporate governance. It is easier to sell the stock than change management. I think this mostly cause the system is so stacked against us

[chinaco]

I didn't read the whole article... I scanned it. It looked like it was criticizing consumer credit (i.e., credit card companies with high rates and fees).


There is a bit of a problem with credit. People are acting irresponsibly with it. And those companies set the trap for the fools that use them irresponsibly.


IMHO - Part of the problem is that companies seeking profits have begun offering credit a little too loosely. There are many many negative consequences to all of us because of lax credit rules and quick credit. I will admit there are some positives aspects to it... but companies never look to the potential social downside, they only look to profits. An example is identity theft and that type of easy fraud. It was made possible by quick and easy quick credit. Did the industry address it? No. They simply look at it as a cost of doing business. The govt finally had to begin passing laws to make them act responsibly. It seems to me that business never looks to anything but profit (by design).


The broader social well being is part of governments role. I am speaking in general terms of practical reality not theory. In theory it is good business to do good by customers (their well being)... but the fact is the people leading the business often are only in control for a few years and they intend to make as much as they can in their brief term (d@mn the future). Neither business or Govt can get it exactly right. They have slightly different roles. They are complementary! In our world... it is probably as good as it gets.

[ERD50]

Originally Posted by youbet

So, how to you propose that shareholders have more of a say in CEO pay?

Originally Posted by clifp

It seems to me that the most broken area in America is shareholder power.
Most individual (including me), mutual fund, pensions, and other institutions punt on proxy votes, and take no interest in corporate governance. It is easier to sell the stock than change management. I think this mostly cause the system is so stacked against us

Here is what I suggested in another thread:

Originally Posted by ERD50

I It does seem that CEO/BOD have been able to get their pay structured to short term results, while shareholders want long term results. There is a disconnect, but I don't know how we would change it short of a shareholder revolt.

But here's an idea: Some mega-corps and/or major pension plans get together and write up a "good governance" score card. The scorecard would have objective measures of items meant to drive the long term results of the company. Maybe some guidelines regarding CEO/BOD pay tied to long term results, rather than short term. Maybe something about real competition in CEO searches. I dunno. Something along those lines.

Then independent groups would rate the corps on the scorecard. A good rating should encourage people to buy that stock, so companies should want to do well. So it really becomes a transparency thing, with no govt regulation required at all. All voluntary, and geared towards maximizing profit by doing good for both the company and the shareholders.

-ERD50

[ERD50]

Originally Posted by chinaco

I didn't read the whole article... I scanned it. It looked like it was criticizing consumer credit (i.e., credit card companies with high rates and fees).


There is a bit of a problem with credit. People are acting irresponsibly with it.

Part of the problem is that credit isn't good/bad - it is a tool. If someone needs to buy a new suit to go to that job interview, and is totally strapped for cash, that might be a good use of credit.

To me, it's similar to a kitchen knife. A tool to be used for good, or a tool to be used for murder. Same knife - so you can't really regulate the kitchen knife.

But you CAN and SHOULD educate people about the dangers of kitchen knives. And hold them responsible for its misuse. I am so much more in favor of education/transparency programs than I am regulation/laws. But those are sometimes needed ( I have to add that before someone throws out the straw man that I think we should have NO laws - it get tiresome... ).

-ERD50

[haha]

Originally Posted by armor99

So... if the govt gets involved trying to limit how much profit they are allowed to make then in very short order there will not be any lenders anymore...

Not to worry. La Cosa Nostra will be ready to fill in any lacunae.

Ha

[armor99]

Originally Posted by ERD50

Part of the problem is that credit isn't good/bad - it is a tool. If someone needs to buy a new suit to go to that job interview, and is totally strapped for cash, that might be a good use of credit.

To me, it's similar to a kitchen knife. A tool to be used for good, or a tool to be used for murder. Same knife - so you can't really regulate the kitchen knife.

But you CAN and SHOULD educate people about the dangers of kitchen knives. And hold them responsible for its misuse. I am so much more in favor of education/transparency programs than I am regulation/laws. But those are sometimes needed ( I have to add that before someone throws out the straw man that I think we should have NO laws - it get tiresome... ).

-ERD50

I tip my hat to your eloquence.... very well said. Payday loans are neither good nor bad... just the use of such a loan can be determined as such. Sort of the same arguement that environmentalists use... Trees are neither good nor bad either... just the use or un-use of a tree can be determined. Objects have no inherent value... what they are used for can be judged.

Let me start by saying (and I hope you are reading this ladelfina ), I can really respect the other side of this argument. You want fairness... no one taking advantage of anyone, and the overwhelming desire to STOP people from hurting others, I get that... It is I think a goal that everyone shares. What we will not agree upon is how to get there. Your underlying philosophy in life is very important. It determines what you value in life, and guides most of the decisions that you make. My philosophy is pretty simple to understand. You must THINK to survive in life. And those who think the best will generally have the best lives, while those that think the least will generally have the poorest lives.
The other side of this arguement believe that most are incapable of thinking for themselves and must defer to some larger agency (religious group, political party, government) their decisions. I would contend that even if that larger agency makes better decisions than these individuals can make, who is really in control then? Is a society really better when a small group of people control the day to day decisions that the individual should be making? I have read up on all the definitions of govt... and that style of govt is called facist...

[Abreutime]

Originally Posted by chinaco

IMHO - Part of the problem is that companies seeking profits have begun offering credit a little too loosely. There are many many negative consequences to all of us because of lax credit rules and quick credit. I will admit there are some positives aspects to it... but companies never look to the potential social downside, they only look to profits. An example is identity theft and that type of easy fraud. It was made possible by quick and easy quick credit. Did the industry address it? No. They simply look at it as a cost of doing business. The govt finally had to begin passing laws to make them act responsibly. It seems to me that business never looks to anything but profit (by design).

This is wrong, and it's not even internally consistent.

You're saying that "industry" only cares about profits, but was ignoring the cost of fraud, and did nothing to combat it? There is an entire anti-fraud industry that has arisen. And 90% of fraud (I dont have the exact number in front of me, and if I did, I wouldnt be allowed to cite it) is so-called "friendly" fraud, perpetrated by someone who knows the victim (ie. spouse, parent, coworker). The fraud that people generally worry about, strangers stealing your info and opening up accounts in your name, happens very rarely, barely showing up in the data. And yet, companies apply considerable resources to make sure it NEVER happens, even when it's not cost-effective to have that as your goal.