On Certification Instead of Regulation

Thursday, January 7, 2010 \PM\.\Thu\.

What started as a “Ha, do you libertarians endorse this?” dare by Mike of Rortybomb has turned into a somewhat interesting discussion between him and Megan McArdle about to what extent it’s possible to protect people who are not good at understanding complex financial products (the elderly, or people who just aren’t good at understanding complicated service agreements) from being victimized by banks without in the process hurting the people you’re trying to help. This as the new credit card legislation is going into effect, trying to crack down on banks which raise interest rates quickly if you’re late paying, have hidden fees, or move due dates around (theoretically in an attempt to keep people from paying on time.)

Mike suggests that banks should be required to offer a “plain vanilla option” of products such as credit cards or checking accounts.

And that solution would be mandating financial services to provide Vanilla Option financial products. Boring, low-reward trap-fee products you’d probably have to pay a yearly fee for.

So much of our financial services are predicated on tricks and traps but also have a lot of benefits. You get free checking, but if you overdraft you lose more than you gained. Now with a vanilla option, you could pay more upfront to not take the risk of losing later. This is banking how it used to be, boring. And this is exactly the kind of product that people with weak cognition would want to have available. Someone approaching older age, but before getting there, could opt for the “extra boring” financial services package. People buy renter’s insurance; some might view a yearly-fee on their checking account or credit card as a “trap insurance.”

Megan doesn’t think the idea would be very successful: Read the rest of this entry »


Generic Congressional Ballot: Nine Point Republican Lead

Thursday, January 7, 2010 \AM\.\Thu\.

Scott Rasmussen, the best political pollster in the country in my opinion, had a stunner yesterday in his latest generic Congressional ballot:  the Republicans have a nine point lead, 44% to 35%.

The latest generic ballot numbers highlight a remarkable change in the political environment during 2009. When President Obama was inaugurated, the Democrats enjoyed a seven-point advantage on the Generic Ballot. That means the GOP has made a net gain of 16 percentage points over the course of the year. Support for Democrats has declined eight points since Obama’s inauguration while Republican support is up nine points.

The Republican gains began in February when Republicans in the House unanimously opposed the $787-billion economic stimulus plan proposed by the president and congressional Democrats. At that time, Republican gains came almost entirely from the GOP base. Currently, just 30% of voters believe the stimulus plan helped the economy while 38% believe it hurt.

The two parties were very close on the Generic Ballot throughout the spring, but Republicans pulled ahead for good in late June. Those GOP gains took place after the health care debate began and unaffiliated voters began to shift away from the Democrats. Only 40% of voters currently favor the health care plan, while 55% are opposed. Read the rest of this entry »