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Turns of phrase


A couple recent gems:

  • “Socialized firefighting”
  • “Water off a duck’s back”

Financial Product Safety Commission notes and sources


  • Elizabeth Warren originally promulgated the idea with a Summer, 2007, essay in Democracy: A Journal of Ideas titled “Unsafe at Any Rate”.
  • A bill establishing a Financial Product Safety Commission has been introduced in Congress as H.R.1705 and S.566, and referred to committee in both House and Senate.
  • Contemporaneously, the Consumer Financial Protection Agency Act of 2009 has been proposed by the Obama administration, with this main document, and this Fact Sheet, both presented — and celebrated centrally — as part of the administration’s broader financial regulatory reform platform.

Data initiatives


A recent few with varying degrees of promise and accomplishment, but all of interest:



… is the often art of the prophet and the fool.  Nevertheless, I’ll dare to go ahead and describe what I expect will be, a decade hence, two consensus views about economic policy during the past tumultuous year.

First, people will believe that on balance Ben Bernanke and the Fed did a spectacular job at averting depression.  The risk of even more extreme collapse was real, and abundant provision of liquidity was stabilizing.  Doing too little would have been the far greater risk, and the designation of Bernanke as hero will have stuck.

Second, people will conclude that the greatest policy failure was providing too much direct support to banks rather than to homeowners.  Let me elaborate.  First, many banks lent to anyone with a pulse during the boom, in the form of residential mortgages, credit cards, and commercial loans.  When the bubble burst, so did these banks’ balance sheets.  Some of the wave of bank failures was inevitable.

But consider the ailing institutions (including some of those deemed too big to fail) that were in trouble largely because of their residential mortgages.  Many of these received lines of credit, support for being acquired, or direct infusions of resources (see this useful rundown of these steps as of 7/22/2009).  Suppose that instead of most of the steps in that rundown, the Making Home Affordable program had been vastly more aggressive:  larger in size by an order of magnitude, implemented within months rather than years, and more generous to individual homeowners in amounts and eligibility.  (Treasury celebrates the accomplishments of MHA, but capacity constraints and foot-dragging by lenders and servicers have prevented it from living up to expectations even at the actual–modest–$75B scale).  These would have been the advantages:

  • Banks still would have gotten bailed out.  If a bigger MHA paid for principal reductions on mortgages, bringing borrowers back above water, banks’ assets would have looked much better and direct infusions would have been less necessary.
  • The moral hazard problem for consumers is smaller than for mortgage lenders. The Great Crash tells us that in the Roaring ’20s, “The bankers were also a source of encouragement to those who wished to believe in the permanence of the boom. A great many of them abandoned their historic role as the guardians of the nation’s fiscal pessimism and enjoyed a brief respite of optimism,” and recent times have reminded us all of the healthiness of bankers’ pessimism.  Bailing out banks only via bailouts of their borrowers keeps the banks more honest and more responsible for their follies.
  • Banks are more easily able to organize and lobby than consumers, suggesting that more of the money distributed to banks would be rents from captured officials.
  • On fairness grounds, recent transfers to banks have been abhorrent.  Many bankers ditched their sensible pessimism, rode the wave to fantastic returns (sometimes by taking advantage of borrowers who they should have anticipated would not be able to pay), and have now been carried gently to shore.  Transfers to imperiled homeowners instead would have left the banks more on the hook.
  • Foreclosures are extremely socially costly, and current foreclosure rates are at historic levels.  Large direct transfers to homeowners, to pay mortgages down to the levels of current realistic appraisals, would have prevented many more foreclosures than the actual policies we’ve seen.

Sheila Bair was a prescient early proponent of large transfers to homeowners via mortgage loan modification.   Marty Feldstein has just recently signed on.  Populist outrage against the banks has not been in short supply.  These views and others may be enough to coalesce into consensus over time.

Making predictions using credit card data


The biggest surprise to me in this article in Sunday’s Times, about how lenders use meticulous information about purchasing patterns to forecast default, is that the article treats this as a surprise.  Data on what we do is valuable to firms, and we should all expect that much of that data is being used for individual-level forecasting.

But I was also interested that I could find only this one source online (unrelated to the Times article) that discusses what Martin did at Canadian Tire, and it and the Times article are comparably vague.  I’d be curious for other sources and technical details.

These guys…


should go to jail and never come out.  With juveniles.

Blogs and Awareness


Simply, straightforwardly, I appreciate and support BlogCatalog’s quarterly efforts to unify bloggers behind a meaningful social cause.  Today, November 10, with them I think of the plight of refugees.



I work with big, complicated databases all day, and I find it incomprehensible that any so critical as the voter registration databases could be managed so incompetently, in a way that encompasses so much belief in unreliable records and so much disbelief of human beings.

Massive federal allocations to the states, conditioned on massive upgrades and improvemets in voter registration technology and election-day voting technology, seem like no-brainers, even if more states adopt Oregon’s brilliant– and brilliantly successful– strategy of conducting all elections by mail.

Crisis links


  • Original draft proposal
  • Draft bill sent to the House of Representatives yesterday (M 9/29/2008)
  • Final bill?
  • Like usual, the BBC has great overview material, in addition to their up-to-the-minute news coverage.
  • Series of the crucial statistics, ie, interest rate spreads and volumes in the short-term commercial credit markets?

Dragon fruit…


hailed the new year earlier tonight.  In dried form, from Trader Joe’s, it was a not-unappealing cross between raspberries and potato chips.

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