Perverse Incentives

Barney Frank was on Face the Nation this morning talking about the problems of perverse incentives created by the current policies.  These guys, he said, can make risky decisions and make great profits, but if the turn out to be wrong decisions they don't have to worry about all the loss.  Congressman Frank argues that we need to change this.  REALLY???
It would have been nice if he knew that basic lesson of economics before he pushed for a lowering of lending standards over a decade ago.  But while he might have learned something in the process about incentives decision makers face, he hasn't learned that the current set of rule changes being advocated are simply augmenting the perversity rather than countering it.

Comments

[Bob]

The gall of this low life is mind boggling! It's like having Bernie Madoff fix the banking system! Frank has no shame. The only logical conclusion is that Frank is out to destroy the capitalist system to replace it with socialism!

[Lee]

Barney Frank is my go to guy for anything perverse.

[spencer]

specifically, what lowering of lending standards did he push for?

[Mike]

Didn't Barn appear on Capitol Hill last fall telling us what a buncha' idiots we were daring even to ask him why we needed to pass the TARP without debate? As if he could even bother stooping to explain to ignoramuses like us?

Mr. House Finance Services Committee himself?

With all due respect, fuck Barney Frank.