Article • Dean Baker’s Beat the Press
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It would have been worth including this point in an interesting column by Gretchen Morgenson noting how bank regulators remain close to the industry they regulate. The point is straightforward. If banks can make profits by writing deceptive contracts and finding ways to trick consumers, then they will devote resources to this effort, instead of concentrating on providing better services and reducing costs.
From the standpoint of the economy, devoting resources to ripping off consumers is a complete waste. It simply redistributes money from the rest of society to the banks. For this reason, people who care about economic growth should support measures that prevent predatory practices by the financial industry.