Somebody buying insurance tied to a contract tied to loans scattered from Laurel to Las Vegas did not have good information. Neither did the unsophisticated buyer whose real estate agent told him he could afford a starter mortgage payment that was 40 percent of his income.
Mortgages are the worst development of a decades-long trend.
Consumer contracts of all kinds have left regulators eating dust. Credit-card disclosures take thousands of words to say the company can charge pretty much whatever it wants. My car insurance documents are indecipherable.
It has been 40 years since Congress passed the Truth In Lending Act, which made companies stop lying about interest rates. We need something similar to bring new simplicity and clarity to all kinds of transactions.
Some reforms might involve removing consumer choice altogether.
I suspect consumer electricity will eventually be re-regulated, relieving people who are tired of shopping for credit cards, cell phones, landline phones, bank accounts and cable contracts of at least one decision.
Some will involve better regulation of existing choices.
There is much talk of protecting people against credit card, auto loan and education loan abuse, not to mention mortgages. Harvard law professor Elizabeth Warren has proposed a Financial Product Safety Commission that would be similar to the existing agency for kids' toys and the like.
All this would come under the umbrella of consolidating regulators, boosting capital requirements and extending civilization to hedge funds, derivatives and other untamed parts of the jungle.
Is there a chance Congress will go too far? Absolutely.
Can you and I probably cope perfectly well with mortgages and credit cards as they are? Sure. But many others haven't. When that happens, we've learned, it blows back on everybody.
The large print giveth, and the small print taketh away, says singer Tom Waits. Time for more of the former. And a lot less of the latter.
