An Idea So Good It Will Never See the Light of Day

As a part of the Consumer Financial Protection Agency, Congressmen Alan Grayson, Wm. Lacy Clay, and Brad Miller have proposed the "Financial Autopsy" amendment.

The summary is:

Today we will offer the “Financial Autopsy” amendment. The Grayson/Clay/Miller amendment is essential to attacking the root problem of consumer bankruptcy and foreclosure because it requires the CFPA to do a financial audit of products that have caused the highest rates of bankruptcy and foreclosure annually. Not later than March 31st of each calendar year, the CFPA will list these anti-consumer products, submit their conclusions on why these products “fail” consumers, the companies and employees that underwrote these products, and authorizes the CFPA to take action to restrict these products.

Financial Autopsy Amendment:

• Requires the CFPA conduct a “Financial Autopsy” of each state’s bankruptcies and foreclosures (a scientific sampling), and identify financial products that systematically led to a large number of bankruptcies and foreclosures.
• Requires the CFPA report to Congress annually on the top financial products (the companies and individuals that originated the products) that caused consumer bankruptcies and foreclosures.
• Requires the CFPA take corrective action to eliminate or restrict those deceptive products to prevent future bankruptcies and corrections
• The bottom line is to highlight destructive products based on if they are making people “broke”. Thank you for your consideration, we hope you will join us in supporting this amendment.

This is brilliant. As opposed to coming up with rules that some quant will be paid 6 figures to evade, simply identify bad financial products by seeing which ones make people go bankrupt.

The problem is not specific financial products, it's the fact that there are looters out there, and they will continue to find ways to loot people.

The solution is to look for the looting, and take away tool sets as they are used to do this.

At the link above, the author, "George Washington" suggests that the reports should be updated monthly, to eliminate the delay in response, and Karl Denninger argues that it needs to prevent minor tweaks to allow for reissuance of the products, and that it should have provisions to allow the victims to claw back their money.

These are all good points, but this is an amazingly good starting point.