The Fed Should Buy Down Consumer Credit Card Rates - Fast | Hacker News Reader

The Fed Should Buy Down Consumer Credit Card Rates - Fast

blogmaverick.com

15 pointsAnon848 comments

In exchange for Bailout Funding, the TARP should require banks that issue credit cards, whether in their names or others, to limit interest rates and fees.

No clue. None. The guy is obviously a competent technologist and basketball fan, but manipulating prices causes shortages, surpluses, black markets, and suffering.

If you force a bank to charge prime rates to Bill and Mary Ne'er-do-well, then the banks will simply drop the credit lines. Result: The underground market takes over, and Bill and Mary get their loans from (at best) a grey market "paycheck advance" outfit, pawnshops, or (eventually) the mob.

His economic "theories" are half baked at best. Seriously, the amount of unintended consequences of his proposals are absurd.

This must be the 4th article from him on Hacker News on economics, none made sense. STOP UPMODDING THEM. This is Hacker News not Things That Random Hackers Might Have Said That May Or May Not Be In Any Way Intelligent.

Much as I find it interesting, I would rather avoid economics altogether, as it often ends up being a clash between people who fervently believe in "Austrian" economics, and people who are more inclined towards mainstream economics of various stripes. This almost inevitably leads to lots of heat and little light.

"Bill and Mary get their loans from (at best) a grey market "paycheck advance" outfit, pawnshops, or (eventually) the mob"

Or maybe Bill and Mary finally realize they don't really need a lot of the crap they have been going in to debt to pay for?

Maybe too much to hope for.

Definitely too much to hope for, Bill and Mary have friends who "need" to be better than Bill and Mary. If Bill and Mary don't want more credit, their neighbours Mark and Kathy will get more credit.

Your right. Some bits (like the last article) of Cubans economics might be interesting trains of though to follow. But this is pretty dumb.

It's either ignoring the very basic of economics (if you make vendors charge less for something then it costs them, they stop making it) or it failing to see that credit is just another thing you make & sell.

>If you force a bank to charge prime rates to Bill and Mary Ne'er-do-well, then the banks will simply drop the credit lines.

Why not? They'll just be bailed out by the taxpayer when the Ne'er-do-wells default.

when there's crisis, some people can use it for manipulation

For example:

Yesterday, NCC bank got acquired stock-for-stock 0.0392 ratio (2.23 / 56.89) by PNC bank.

NCC did not get TARP money. PNC got money from treasury in return for preferred stocks

NCC largest shareholder (Corsair) gets 4+ bln in 'non-stock dividend' + 3 bln shares valued at $2.35 (Corsair invested 7 bln dollar during the last 6 months)

NCC executives get 300+ mill usd in compensation and 'golden parachute' (they will be in PNC+NCC board)

the employees of NCC (non executives) got laid off (4000 already) and will be more

The shareholders got shafted, thursday close was $2.77, the deal is priced at $2.23

There's a class action lawsuit in progress against NCC -- NCC CEO said NCC is "well capitalized" and various misleading things that can be considered fraud

In effect, FDIC infused TARP money to PNC to buy NCC, in return for the stakes (they say every bank qualifies -- that's not right)

See, in crisis some people get more power to screw everyone ... so don't worry about credit card crisis not happening -- it will ... some people want it to happen

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