Vetting financial innovations - part 2

In an earlier posting, I commented upon a notion by Jagdish Bhagwati about the need to vet financial institutions. Most of my comment was on his naive statement that it was not necessary to worry about technological innovations -- the assumption that technological change is automatically benign. I disagreed with that view, but supported the idea of vetting innovations.

Turns out that the notion of vetting financial innovations is not an original idea. Over a year ago, Professor Elizabeth Warren of Harvard Law School wrote about the need for a Financial Product Safety Commission in Democracy: A Journal of Ideas - Unsafe at Any Rate: "If it's good enough for microwaves, it's good enough for mortgages."

Sounds good to me.

By the way, John Kao, in his book Innovation Nation, has proposed a Congressional Office of Innovation Assessment patterned after the old Congressional Office of Technology Assessment.

Also sounds good to me.