“Well, the last administration did it.” I’m consistently amazed by this rationale offered by defenders of the current administration for blatantly wrong-headed moves. Rack up trillion dollar deficits. The solution, apparently, is to add $2 trillion more. We induced moral hazard in housing during the Bush years, so the fix is to put policies and procedures in place that induce more.
The credit card industry is the latest to fall under the purview of the nation’s chief executive (I don’t mean that in the traditional sense, and this is his first foray in to the private sector, BTW). According to the Wall Street Journal, President Obama is meeting with industry players to put pressure on companies over their credit card fees and lending practices. Our old friend Chris Dodd (sigh), defender of the people from mortgage giants … oh, wait, insurance carriers … damn … banks …never mind, is drafting a bill to do the same.
Both want companies to lower rates and lend more. Let me repeat that; lower rates and lend more. Where have we heard that before? Oh, yes. It’s the reason for the worst global economic crisis the world has ever seen, which, by the way, the rest of the world in large part blames us for. The solution? More of the same. I asked it before and I’ll ask it again. If we were supposedly so off track, how will an exponential increase in the same policies that got us here be any better? Readers will hammer me with the fact that we’re so soon in to the Obama era, and to give it time. But the moves he’s made are large indeed, and will have lasting impact. And besides, nothing he has done thus far would indicate a radical shift in domestic policy solutions to the crisis. To suggest otherwise is intellectually dishonest.