Wall Street Journal columnist James B. Stewart can’t have it both ways.
In a column in yesterday’s WSJ, Stewart, says that the consumer lending process “…could use an overhaul…” and he applauds the Obama plan for doing that.
But in the next paragraph he says that he’s worried that the proposals will end up “…limiting the number of people who qualify for credit and the amount they can borrow.”
Duh.
Stewart can’t have it both ways. Making the process more transparent isn’t just so that potential borrowers know what they’re obligating themselves to repay, it’s also so that lenders have a better idea about who can afford the loan they're being asked to make.
Of course fewer people will be able to borrow; that’s the idea. Restricting the credit to those who can afford it means fewer defaults. Fewer defaults mean fewer or no bailouts.
What did Stewart expect? More clarity about the terms of a no-doc or ninja loan?
James B. Stewart
I don't think Stewart wants it both ways. He wants clearer disclosure of consumer credit terms, so that people can better decide on their own whether to proceed. "Restricting credit" suggests someone--another job for another federal Nanny?--will be doing that, a result that Stewart says he doesn't favor. Virgina Postrel has a nice piece on the happy consequences of expanded consumer debt,and the moralistic finger-wagging that has long accompanied it, here: http://www.theatlantic.com/doc/200811/debt