Robert K. Merton listed six possible causes of unanticipated consequences:
1) Ignorance,
2) Error in analysis,
3) Immediate interests,
4) Basic values,
5) Self-defeating prophecy,
6) Relevance
I'm pretty sure making loans is why banks were formed in the first place... what a bizarre concept - forcing them to go back to what they were supposed to be doing all along. Weird.
From Ali H.: But can they be trusted to actually do what they are supposed to do vis-a-vis to get the capital they need?
ReplyDeleteFrom Mark L.: But trading is a form of lending, if you think about it...
ReplyDeleteProper regulation should keep them in check... but that opens a whole other can of worms related to proper compensation of regulators, etc.
ReplyDeleteTrading is not the kind of lending that banks should be doing... improper alignment of risk and reward.