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March 23, 2007
Defending financial innovation
David Leonhardt defends financial innovation (Once Again, Debt Is Miscast as the Villain - New York Times):
But whatever happens, it’s important to remember that the mortgage market is following a classic cycle that nearly every other form of consumer credit has also followed. When somebody comes up with an innovation, be it consumer loans, credit cards or creative mortgages, it inevitably leads to an explosion of borrowing that includes a good amount of excess and downright abuse. After the abuse is cleaned up, though, most families end up better off.
I hope we will keep that thought in mind as we go through the normal orgy of outrage and blame-finding -- which has already started (see Senate Questioning on Mortgages Puts Regulators on the Defensive - New York Times and Fed Faulted For Inaction On Mortgages - washingtonpost.com
Posted by Ken Jarboe at March 23, 2007 9:37 AM
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