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Update Kahrdinal Sins
November 2, 2009
Banks, Credit and The American Consumer
The Card Game - On air and online November 24, 2009 at 9:00pm (check local listings) Some top authorities on the consumer lending industry accepted FRONTLINE's invitation to weigh in with commentary on the industry, its range of products, and the debate about a new regulatory framework. This blog is part of a FRONTLINE/New York Times joint project, The Card Game, comprising a series of reports by the Times and a documentary by FRONTLINE, which airs Nov. 24th. WATCH A PREVIEW »
--a response to Andrew Kahr by Jim Blaine, State Employees' Credit Union, North Carolina
Andrew Kahr sure takes Messieurs Bubb and Kaufman to task in his blog response! Perhaps he should be more gentle, a bit more patient. After all, Bubb and Kaufman are admittedly just young, budding, novice economists; give them some space, surely their worst work still lies ahead!
Actually, I was well pleased with both the tone and stridency of Mr. Kahr's rebuttal. Having watched his interview on FRONTLINE's 2004 program, Secret History of the Credit Card, I had always assumed that Mr. Kahr's views had been "over-edited" to the verge of villainy. His blog post corrected my doubt.
In Mr. Kahr's view of the consumer financial marketplace, there are no uncertain terms, there are no unintended consequences. Our universal human frailties are well understood. The subtle credit card tripwires and "gotchas" are purposeful; the "violations" anticipated; the "high punitive rates and fees" finely calculated; the potential for family financial catastrophe fully intended -- fully intended and fully ignored. The consumer financial "sucker punch" is delivered by Mr. Kahr and his ilk without remorse nor regret.
Mr. Kahr has simply reaffirmed his 2004 interview belief as to the "swiss cheese" porousness of all financial regulations and his personal conviction that there is always "another angle," there is always a "work around" to any rule. In the blog post Mr. Kahr says: "We figured out how banks could avoid state rate regulation;" and, one must assume that, unconstrained by conscience, Mr. Kahr can once again find "creative" ways to compromise fairness. Mr. Kahr avers that reasonable card regulations may eliminate choices for "some of us who are clever or righteous enough to merit exemption." Ah, hubris and the pungent whiff of several sins cardinal ... or shall we say Kahrdinal?
Can there be a better symbol, or symptom, than Mr. Kahr of why the American financial system is currently in such disarray and held in such low esteem worldwide? It's not that our financial system suffers from "moral hazard;" it's that we have succumbed to "amoral hazard." We suffer mightily from the disregard and disdain of creative financial geniuses, whose vocabulary finds no degree of moral distinction between words such as persuade, cajole, tease, tempt, entice, mislead and deceive. As we now see with much clarity, in a financial system where "anything goes," eventually "everything goes." While Mr. Kahr may pass, with highest marks, tests of his intelligence, he seems at best unaware that he may well come last on several of the most basic tests of our humanity.
Emperor Kahr wears no clothes and is now nakedly revealed as a false prophet of false profits, a dangerous Kevorkian of American family finance. Next Halloween, to really scare the neighborhood kids, I'm dressing up as Andrew Kahr!