Hobbit@Law

Looking carefully at that which is unseen.

Category Archives: OTB

OTB: Bankers and OPM

Should banks be regulated by the State, like utilities? These guys think so.

Now as a libertarian in good standing I don’t know that I can truly condone government regulation and meddling … except … as the writer quotes, the banks are indeed playing with OPM – Other People’s Money, whether it’s in the initial risky loans or in the bailouts that they demand come from my pocket after those loans go sideways.

Perhaps an understanding that banks need to be insured against losses (hey, my car and house are!) and that banks, insured or not, should have no better right to dip into my pocket for a risky investment than anyone else, would prevent the need for tougher regulation. But, up until such happens, if the banks are going to have a call on my wallet, perhaps I – through my legislator – need to have some say in how they operate.

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Thinking about: Negligent use of public money

Why isn’t there a crime of “misuse of entrusted state monies?” Elements would be simple – an elected or appointed official who is responsible for disbursal of funds, or an employee under the control of such an official, who provides funds to any individual or group without achieving the stated results, is subject to criminal sanctions, UNLESS that person makes restitution of the funds to the public treasury. Add enforcement by civil trial (i.e. proof by preponderance of evidence), a private right of enforcement by any taxpayer who paid money into the fund so misused, attorney fees, and you’re off and running.

OTB: Fixing the economy

Or at least patching it up a bit, by getting more money flowing into the commercial economy from individuals, with six simple words:

“Student loans are dischargeable in bankruptcy.”

Now, clearly, contracts are fairly sacred to libertarians, so suggesting that a contract for a repayment on a loan be voidable as a matter of law may seem, at first blush, to be anathema. However, most student loans are nothing more than unsecured debts and perhaps making them dischargeable in bankruptcy (again, they were before) would make creditors a bit more chary in regard to lending some kid $100,000 to get a degree in underwater basket weaving. This is not to say that colleges couldn’t continue to offer such degrees, but the market would likely be relatively slim, and schools would need to begin offering more substantive courses in order to attract students who could pay. Or cut their costs such that part time pay-as-you-go would-be aquatic basket weavers can still obtain their life’s ambition.

Furthermore, if schools begin offering degrees in math, science, engineering, and so on, lenders are still going to need to look at just how likely a borrower is to obtain employment (and thus repay the loan) based on his likelihood of being hired after. If Downstate U.’s engineering program graduates are unable to assemble an Airfix model without close supervision, lenders aren’t going to be willing to advance much to a student who is paying for the arguably worthless degree from that institution.

OTB: Banks as public utilities?

From Naked Capitalism – the best daily economic stop on the web:

Why not, though? Since they’ve effectively socialized their losses while keeping their profits private, maybe it’s time for a different view of banks and banking, particularly given the State’s reluctance to allow private banks – or the lack of desire by states (other than North Dakota) to establish them.

OTB: Why not, for once, help the little guy?

The State mucking around with the economy is generally a Very Bad Idea. But why not try this Outside The Box idea:

Instead of paying ever more (borrowed) money to the Big Banks, why not declare a one year moratorium on income taxes? That’s right, no taxes collected – or due – for individual filers for the tax year. Corporations would still need to file and pay. The amount of money “lost” would be about the same as was borrowed for TARP, so the results would be similar on the balance sheets – but think about the economic effects of putting hundreds of dollars back in people’s pockets every month.

It’s OTB – but tell me why it’s wrong.