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Edward Glaeser makes the perfectly obvious, and often forgotten point that regulators are mere mortals, too, and so can be just as non-rational as the consumers they are supposed to protect.
A consumer protection agency, however, is based on the view that a regulator can help offset the errors made by private individuals. In some cases, regulatory agencies really do make things better . . . . But history has seen plenty of bad regulation, whether in railroads or financial markets, that privileges insiders and restricts innovation. The best way to avoid these missteps is for the Bureau of Consumer Financial Protection to have modest, well-defined goals, like providing clear information to borrowers. Clear, limited objectives will reduce administrative overreach and respect the fact that politicians and regulators are people, too, and make the same kinds of mistakes as lenders and home buyers. [Emph. added]
I somehow doubt that “clear, limited objectives” are what the Obama people have in mind for the CFPA. This is not going to end well. . . .
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