If there's anything we've learned the past few months, it's that Gordon Gekko (aka Michael Douglas) had it wrong when he said "Greed is Good.". The real point, ladies and gentleman, is that smart regulation, competition, risk based pricing, open markets and access to capital are the basics for businesses to thrive responsibly.
What's been missing is smart regulation and risk based pricing within the credit markets, specifically the mortgage and home equity industry. The intent here is not to assign blame, although anyone who had their had in the cookie jar should be held accountable. After all, if we had risk based pricing, one could argue that the present delinquncy and default rates should have been forecasted appropriately by banking analysts.
So is it any real surprise that if such lax standards are witnessed in a highly regulated industry, like home mortgage, that other credit industries would fare worse? I'm no economist so if there's something I'm missing, do share.
