The president is trying to introduce some reforms into the banking and financial operations of our markets. He apparently wants these businesses to be good businesses, to be more “transparent” in some of their transactions. But some of the executives seem to be somewhat reluctant to support the full extent of his proposed reforms. It is reasonable to expect business executives to refrain from trying to sell merchandise that is dangerous without clearly noting its dangers. It is reasonable to pass laws against fraud in business transactions and to prosecute accused offenders. But there is a reasonable difference between what is fraud and what is just a “shady deal”.
A good business?
There is a difference between what is a deadly or dangerous side effect to some product and what is just a possible side effect for some users. There may be a difference between the advertised claims of a product and its actual benefits, but these differences are commonly overlooked unless the real effects of using the product are severely dangerous. Many used cars are sold “as is” with no guarantees or warranties. Perhaps high risk mortgages should be sold the same way. But then the banks and financial business that hold them might have a hard time in selling them, and they may lose a lot of money when the lenders default.
No one wants to loose money in any business transaction, but most business transactions involve some risks. So the reform issue seeks to minimize some of these risks. How much “transparency” is really appropriate in any good business? Is honesty really the best policy? What if all of the risks involved in the use of some product are not clearly stated in the “fine print”, is that grounds for “fraud”? Let’s talk about this.