Getting Rid of More Junk Policies

When Obamacare forced cancellations of health insurance policies in the individual market the supporters first denied it, then said the policies were junk policies. Praise the Lord! Obamacare is now going to rid the small business market of junk policies. From the Washington Post:

When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies. 

But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.

Who knows, maybe the Administration will delay this portion of the law as it has delayed and waived much of the law. Whatever happened to "this is the law of the land" antiphone the supporters of the law made whenever asked about the votes to delay, diminish or destroy the law by the crazy, evil, insane, stupid, racist, Neanderthal, Republicans whose sole focus is to keep people from having access to health care?

I particularly enjoyed this quote:

Jonathan Gruber, a key architect of the health law and a professor of economics at the Massachusetts Institute of Technology, said the number of people covered by small-group policies that will be discontinued is “not trivial.” 

“We’re ending discrimination [against people who are sick, and as a result] the people who were previously benefiting may now suffer,” Gruber said. “That’s sad for them, but it does not mean we should continue discrimination.”

The number will be "not trivial." Well, you know the saying, extremism in the service of health care is no vice.

This word discrimination is thrown around a lot. It is clearly being used in a pejorative sense to connote some wrong-doing. But riddle me this: If I build a house in a flood plain is my higher flood insurance premium "discrimination?" If a driver with a record of drunk driving is charged higher auto premiums, is that "discrimination?" Are life insurance premiums "discriminatory" because an 80 year old is likely to pay more than a 20 year old?

There were four foundational promises of Obamacare:
1) If you like your plan you can keep your plan.
2) If you like your doctor you can keep your doctor.
3) Premiums will decline
4) More Americans will be covered

The first three promises are obviously absurd, and now recognized as such by most of the cheerleaders of law, after vigorously making the opposite claim for years. The fourth can be accomplished fairly easily, but the Democrats decided to go around their elbow to get to their rear and came up with Obamacare instead.  They bungled the law so badly it's not clear to me even the fourth foundational promise of this law will be kept.

Couldn't Happen to a Nicer Guy

Paul Krugman Collides With The Truth (Healthcare.gov Edition)

By, Chris Rossini

As an update to a previous post, I'm proud to announce that Truth and Paul Krugman have crashed into one another. It's in regards to Healthcare.gov, but hey, when worlds collide, it's only right to recognize it.

So let's look at the timeline (my emphasis):

Oct. 1 - "The glitches will get fixed."

Oct. 14th - "Obviously they messed up the programming big time, which is kind of a shock. But this will get fixed..."

Nov. 6 - "If the bugs in healthcare.gov get fixed..."

AND NOW .... Drumroll please!

Nov. 20 - "But the future of the reform depends not on policy per se but on whether the IT issues can be fixed well enough soon enough, a subject on which I have zero expertise."

There we go...Krugman has no clue. He had no business saying that anything would work. It took almost 2 months, but he got there.

Now that we have Healthcare.gov out of the way, let's build on this admission of ignorance. Let's move on to Economics....

Prices and the Affordable Care Act.

The biggest problem with the Affordable Care Act, and Medicare and any single payer system is consumers are shielded from price. When prices are too low, people over-consume. The Obama administration realizes this. From the Washington Post on Healthcare.gov:

The problem there was politics, not code. In the first version of HealthCare.gov, there was no way to window shop. You needed to register an account in order to see the plans. The rationale was sensible enough: The White House wanted to ensure people saw the real price they'd be paying. That meant verifying their identity, their income, their age, their citizenship, and everything else that goes into calculating subsidies.

This proved a technological nightmare. Imagine if before browsing a book in Barnes & Noble you had to find a clerk and have them take down and verify your credit card, your phone number, and the address you want the book sent to once you've bought it. The staff would quickly be overloaded. No one would ever get into the store. And it would be a massive waste of time because many of the people clogging the line were just there to browse anyway.

 When the Post says the White House wanted people to see the real price they would be paying, it is saying the White House didn't want people to see the real cost of their health insurance. It didn't want old and sick to see how much it really costs to insure them, because they may choose not to buy. Where they less concerned the young and healthy people wouldn't notice they were being forced to overpay to subsidize the old and sick, or did they succumb to their own hype and believe somehow exchanges would result in lower prices for the young and healthy as well? Or was it a numbers game: many more getting subsidies, than paying for over-priced insurance and the politicians were willing to make that trade-off?

It is ironic the ACA is in deep trouble due to it's willful desire to shield consumers from price and that desire resulted in a technological, are we still calling it Glitch?

The idea consumers should be shielded from price is the biggest objection many, including myself, have had to this legislation from the very beginning. The ACA relied on insurance as a financing mechanism for health care, the original sin, removing the consumer from seeing the price of his consumption, and doubled down by removing the consumer from seeing the price of his insurance. It took a bad system, and made it worse.

Single payer won't make it better. It will make it even worse. "Free" healthcare will result in more over consumption. The only way the government will be able to ration healthcare is by bureaucratic mechanisms which includes deciding what treatments people can and can not have and when they can have it. It will be health care for the loudest. Scream you need your neighbor to pay for your birth control and birth control becomes free. Scream you need your neighbor to pay for your ED and ED becomes free. This has already happened with Medicare and ACA, there's no reason to think this trend would moderate with single payer.

Bill

Gaming the Affordable Care Act.

When the price of something is artificially controlled, all sorts of crazy ways to arbitrage will be created. One of the more imaginative (creepy? immoral? disgusting? unseemly?) and tongue-in-cheek ways is below. You might think this particular one will never occur, and that's probably true. The point is, plenty of other schemes will.

So, if it's now illegal for a medical insurance co to refuse people for 'pre-existing conditions'-- what's to prevent a group from using this for various extortionate purposes? For example you live in a big city, you have cancer, and you are friends w/ a bunch of cancer victims. You get them all on board to threaten to switch from their disparate insurers to a single one, such as ABC Insurance Corp. You call ABC and tell them, 500 of us cancer victims will sign up tomorrow for your policy, and you cannot refuse us, and we will cost you tens of millions. If you just pay us $5k each we will go away.

Bill

NY Times: You WILL lose your Plan. You WILL pay more. You WILL stop complaining about it.

The NY Times editorial page this morning laid out some of the basic tenets of the Affordable Care Act: People will lose their plans, and they will pay more. An adjacent oped has an interesting view on those who complain about this.

Up to seven million people may be able to get health policies without paying any premium at all. Some four million people may have to pay more for new (and better) policies, not all of whom will necessarily be upset at getting better coverage at a competitive rate.

(At least) 4 million will not be able to keep their plan and "may have to pay more." This is just the individual market. The employer based market is much bigger and the disruptions to the employer market will be much larger as well. For instance, my small employer will be switching plans to avoid the Cadillac tax. The Cadillac Tax is a tax on high-price, high-benefit plans. The reason our old plan was a Cadillac plan is because we are a small company operating in NY. We have high premiums, but certainly not extravagant, not even generous, benefits. But such is the "logic" of the law that I must change to a plan with FEWER benefits for the purpose of..... If anyone can tell me I'd love to hear the answer.  The Affordable Care Act's response to their assertion American's pay too much for health care is to incentivice me from buying health care. Ok, but why? What if I want to buy health care? What's wrong with that? I like Apple products. An increasing portion of my budget over the years has gone to Apple products. But that's not a national crisis. I digress.

What was equally interesting to me was an op-ed by Lori Gottlieb remarking on the unsympathetic responses her friends had to her complaint about losing her plan and having to pay more for it.

“Obamacare or Kafkacare?” I posted on Facebook as soon as I hung up with Anthem. I vented about the call and wrote that the president should be protecting the middle class, not making our lives substantially harder. For extra sympathy, I may have thrown in the fact that I’m a single mom. (O.K., I did.)

 She wanted sympathy and instead was told to suck it up.

I understand the whole point of the law is to do this. The point of the law is to make some pay more and get less so others can pay less and get more. This whole Rube Goldberg contraption has that guiding principle. I do get that. But what the supporters of the law are finding out is that people get kind of cheesed when the foundational promises made when passing this law: keep your plan, keep your doctor, lower premiums, fewer uninsured, were deliberate deceptions, at worst, or made from ignorance of the law's consequences, at best.

Bill

Oh, and those heartless, evil, racist, stupid, insane, extreme neanderthals have been pointing out the law's promises were untrue for years. But tell me. If someone is a heartless, evil, racist, stupid, insane, extreme neanderthal for pointing out the truth, what is the person who has been deliberately deceiving or the person who didn't understand the untruths being promised?

The Affordable Care Act and Marriage

Turns out the Affordable Care Act has a fairly substantial incentive to avoid marriage. From The Atlantic

Any married couple that earns more than 400 percent of the federal poverty level—that is $62,040—for a family of two earns too much for subsidies under Obamacare. "If you're over 400 percent of poverty, you're never eligible for premium" support, explains Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation.

But if that same couple lived together unmarried, they could earn up to $45,960 each—$91,920 total—and still be eligible for subsidies through the exchanges in New York state, where insurance is comparatively expensive and the state exchange was set up in such a way as to not provide lower rates for younger people.

Personally, I don't care if people marry, who they marry, how many they marry, how often they marry, what species they marry. Personally, I don't think the government should care either.

I'm guessing this marriage penalty was not contemplated by the authors of the ACA. Designing "a system" sounds so alluring to those in power, and pretty much impossible to do in practice. We are seeing that proven (again) with the ACA.

Let's add this incentive to the long list of perverse incentives (employer incentive to reduce work hours, employer incentive to keep business from hiring, employee incentive to not work, consumer incentive to cost shift to Medicaid, insurance incentive to drop plans and of course insurance incentive to undo the risk pools so painstakingly created by the ACA). It is an edifice doomed to collapse. We've known this from the beginning.

Bill

Losing your Plan is a Feature, not a bug, of the Affordable Care Act

Supporters of the Affordable Care Act (ACA) respond to the "You can keep your plan" broken pledge by saying 1) those were junk plans that are being lost and 2) it only applies to small segment of the individual health care market. Both claims are wrong.

It is curious supporters would make a blanket claim about the quality of plans being dropped, a claim without subtlety and nuance, when it is exactly that lack of specificity that has put the broken pledge of "read my lips you can keep your plan" in such focus. The idea that ALL plans impacting 26 million people are junk is absurd on its face and there is no evidence presented ALL, or the majority, or even some, of those plans are junk.

The claim that losing your plan only applies to a small segment of the population is more troubling. There is plenty of evidence from HHS and CBO that many in the employer-based market will lose there plan. For instance, here is the CBO in May of 2013 estimating 7 million will lose employer based coverage by 2018 and 5 million total in the non-group market by 2017. That's a  lot of junk plans.

Casey Mulligan thinks the estimates are too low. He thinks the number can be 20+ million, driven by the incentives written into the law. Employers have an incentive to drop coverage and employees will have an incentive to allow their coverage to be dropped. He concludes:

Moreover, this is not an issue of the adequacy of the group coverage that's lost, it simply that the ACA induces market participants to tolerate coverage loses in order to, at taxpayer expense, reduce the monetary loses they experience as a consequence of the law.

Losing your health insurance is a feature of the ACA. The ACA was designed to kick people off their plans. This is not a surprise to many who have opposed this plan from the start.

Bill

Did Diane Feinstein Really Say "You can keep you plan" only applied until ACA was passed?

The answer Senator Feinstein gave to Bob Schieffer's question, on Sunday's Face the Nation,  about keeping your plan was that it applied only until the ACA was passed. Let's give her the benefit of the doubt that she was really answering some other question. But what question was she answering?

More and more people are discovering that losing your health plan is a FEATURE of the ACA, not a bug.

SCHIEFFER: The president said in the beginning that one thing was that if you like the health care program you had you could keep it. We now know there was debate within the administration before he said that as to whether that was actually a promise that could be kept. Should the president not have made that statement?
FEINSTEIN: Well, as I understand it you can keep it up to the time -- and I hope this is correct, but this is what I've been told -- up to the time the bill was enacted, then after that it's a different story. I think that part of it, if true, was never made clear. It is really very unclear right now exactly what the situation is. And, yes, that's a problem. But I think it has to be said, this is a very large major priority. And if it can get up and running, it can be, I think, a very positive thing. The big problem here is there are so many destroyers -- in the House, in the public, in the private health care sector that just want to destroy. That's not helpful.

Bill

When Are the Democrats Going to Suggest a Health Plan of Their Own?

1- Dems are upset Republicans didn't support the Affordable Care Act even though the ACA was a Republican idea, thought up by the Heritage Foundation and implemented in Massachusetts by Mitt Romney. Got it? The Affordable Care Act is a Republican idea.
2-Dems are upset the Republicans won't suggest a replacement for the Affordable Care Act. Got it? The Republicans have no ideas for health care.

But if #1 is true, number #2 is false, since the ACA IS a Republican idea.

So the real question is, When are the Democrats going to suggest a health plan of their own? And if the answer is Medicare for All, the question is, Why didn't they pass that in 2008 instead of passing the opposition party's plan?

Bill

Don't Spit on My Boots and Tell Me It's Rain. ObamaCare Edition

From CBS News:

(CBS News) WASHINGTON - For 31 days now, the Obama administration has been telling us that Americans by the millions are visiting the new health insurance website, despite all its problems. 

But no one in the administration has been willing to tell us how many policies have been purchased, and this may be the reason: CBS News has learned enrollments got off to an incredibly slow start.

Early enrollment figures are contained in notes from twice-a-day "war room" meetings convened within the Centers for Medicare and Medicaid Services after the website failed on Oct. 1. They were turned over in response to a document request from the House Oversight Committee.

 The number that signed up the first day? 6. As in 1, 2, 3, 4, 5, 6. Not six hundred, or six thousand. VI.

Now I know it's the tendency of most humans to hide bad news, and put the shiniest happiest face on things.

But as they say in Texas, Don't spit on my boots and tell me it's rain.

Bill

Obamacare to Putin: Please Help!

It is ironic the GOP decided to have a fight over Obamacare the same day the Obamacare exchanges opened. After all, how could they possibly know there would be significant issues? Gosh, I don't know:

Major insurers, state health-care officials and Democratic allies repeatedly warned the Obama administration in recent months that the new federal health-insurance exchange had significant problems, according to people familiar with the conversations.

then there was this from Henry Chao, at the Centers for Medicaid and Medicare Services

   

“The time for debating about the size of text on the screen or the color or is it a world-class user experience, that’s what we used to talk about two years ago,” Henry Chao, an official at the Centers for Medicaid and Medicare Services who is overseeing the technology of the exchanges said at a recent conference. “Let’s just make sure it’s not a third-world experience.”

Well when the administration was in a tight spot with Syria a few weeks ago, the Secretary of State made some offhand comment, and before you know it Putin takes it seriously, and rides to the rescue. That's what the Obamacare needs now, a Hail Mary pass to Vladimir Putin.


The notion the exchanges problem was the overwhelming traffic was suspicious from the start. When a person can't save his security questions, that's not a traffic issue, that's a coding issue. There are many examples of web site behavior that suggest some deeper flaw other than overwhelming demand. And coding issues can be, don't have to be, but can be, tough. Time will tell if  "putting on a brave face" or "whistling past the graveyard" is the more appropriate metaphor to describe the supporters defense of the law these opening weeks.

Software and web sites can be fixed but there are much deeper issues starting to become evident. The system needs young people to sign up for insurance. The young subsidize the old in Obamacare. Without young people the insurance market could enter a death spiral. That is, insurers raise rates to make up for the losses incurred by having too many old, sick people in the pool. That results in even more of the young, healthy dropping out, losses increase and so it goes. All systems that rely on community rating face this risk, so this is a risk that will remain for as long as the program relies on this feature. The big problem for Obamacare is this: Many young people don't get insurance because it's not typically a good deal. Even the supporters of Obamacare admit this. The challenge will be to convince young people they should buy insurance they have demonstrated they don't really want. Plus, since children can stay on their parent's health care plans until they are 26, it reduces the number of young healthy there are to subsidize the old.

Parenthetically, the wife and I have been trying to watch Aaron Sorkin's "Newsroom." We both find it, most of all, boring. It masquerades as impartial and moderate in its political leanings. The amount of misinformation is distressing and it's really a liberal's fantasy of what a conservative should look like. But mostly, it's boring. Anyway the show loves to bash the Tea Party and in a throw-away line criticizes Tea Partiers as voting against their interest. It's a remark I've heard often, and is said without any apparent self-awareness that a key aspect of Obamacare assumes young people will buy something against their interest. Oh well.

The rates on the exchange are also causing some distress for those who bought insurance on the individual market. The problem is, Obamacare mandates certain levels of insurance that in some cases exceeds what consumers want to buy. Rate shock is the result. The administration admits this obliquely by crowing that rates on the exchange are lower than what was estimated or that rates in NY are lower. Well, the rates overall are still higher, and sometimes much higher than what consumers were paying. Supporters will point out the higher prices reflect better insurance. That may be the case. But it's probably small consolation to consumers no longer able to buy a policy they wanted because someone decided consumers really shouldn't be given the opportunity to buy what they want. 

There are also perverse work incentives. Casey Mulligan has articulated these in great detail and I recommend his articles in the New York Times, his blog and his book, The Redistribution Recession. He can be challenging to follow but it's worth the effort.Mr. Mulligan points out the Obamacare subsidies can be analyzed as marginal tax rates. Huh? Consumers may receive a subsidy to purchase insurance. The subsidy depends on income. The lower the income, the higher the subsidy. The more you earn the lower the subsidy. So your after-tax income increases at a slower pace than your gross income. One of the more interesting examples looks at a family of five in California. At at income of $110,280, there is no taxpayer subsidy. However, at an income of $110,279, a family could receive a subsidy of $8,100. So a family that earns an extra (marginal) dollar of income, sees its after tax income decline by $8,099. I suppose supporters of the law will say normal people don't think that way, or it doesn't affect that many people. I disagree. This is from SFGate.

People whose 2014 income will be a little too high to get subsidized health insurance from Covered California next year should start thinking now about ways to lower it to increase their odds of getting the valuable tax subsidy.

"If they can adjust (their income), they should," says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. "It's not cheating, it's allowed."

Mulligan estimates Obamacare adds almost 5% to marginal tax rates overall.

There are also incentives on the employer side to reduce employment. Part time workers do not need to be covered, so companies are moving to lower hours. Small companies avoid the mandate, and I suspect we will see companies near the cliff separating companies required to offer insurance, try to figure out how to grow carefully around that limit. 

It's almost as if the supporters of a single payer system came up with an evil plan: "Let's create a really awful idea. Then when it fails, as it must, we can push for a single payer system." Of course what they'll have to explain is why they are going to be better at devising a single payer system any more competently than Obamacare has been designed. I'm sure they'll come up with something.

Bill

A Pox on Comprehensive Legislation

Eli,

This is from Ben Domenech's "The Transom," on the NSA's data capture program:

And why are we at this point? Because, in some sense, Congress never understood what it was authorizing in the first place when it came to the Protect America Act, which swept through Congress with bipartisan support. http://vlt.tc/wbe  “In reality, the PAA represented a sweeping change to American surveillance law. Before conducting surveillance, the PAA only required executive branch officials to “certify” that there were “reasonable procedures” in place for ensuring that surveillance “concerns” persons located outside the United States and that the foreign intelligence is a “significant purpose” of the program. A single certification could cover a broad program intercepting the communications of numerous individuals. And there was no requirement for judicial review of individual surveillance targets within a “certified” program. Civil liberties groups warned that the PAA’s vague requirements and lack of oversight would give the government a green light to seek indiscriminate access to the private communications of Americans. They predicted that the government would claim that they needed unfettered access to domestic communications to be sure they had gotten all relevant information about suspected terrorists.” 

I maintain Congress never really understood the Affordable Care Act (ObamaCare), nor Dodd-Frank, and probably doesn't understand the comprehensive immigration reform bill. It seems that much of the comprehensive legislation is more of a guideline for the regulatory state to fill in the details.

The result is the atrocity of the IRS targeting political speech,  HHS forcing the Catholic Church to violate its principles, hundreds of new regulations on banks, brokerages, and publicly traded companies and of course the NSA's collection of meta data on our phone calls and postings to the cloud.

Not to worry we are told, it's for our own good. Obama defends it saying this has caught terrorists, ignoring the point it violates our civil liberties. Comic relief can alway be found from the Burns and Allen of the Senate, McCain and Feinstein, who lecture us not to worry since the program has been ongoing for seven years.

The proponents of big government have a big challenge, in my opinion. Tell me again why I should favor these big programs when they appear to run amok in frightening ways.

Bill

Why Is There Mandated Public Funded Education?

Eli,

I'm no fan of Rick Santorum. He's against free-trade, I'm against him. The NY Times has a story this morning quoting Santorum as saying schools run by federal or state governments are anachronistic. I'm sure he'll get nine kinds of grief for this, but other than forgetting to mention local government run schools are anachronistic, I agree with him.

I've never heard a robust defense of public education. There are many cases where it works great. Worked for me, worked for my daughter. Complete failure for my son. And it wasn't because the schools did anything right or wrong, it was just lucky myself and my daughter were adaptable enough to learn with the public school limits, and unfortunate my son was not.

But the inability of the public school system to accomodate kids that are outside of the mainstream is one of its largest failings. Parents essentially get locked into funding a public education via property taxes and it becomes much less possible for them to afford the kind of school their child needs. It crowds out choices that would be available if there were a robust free market in schools.

Of course, public schools do the most damage to those who need it most, the poor and powerless. And the typical response is, since public schools are doing such a poor job, let's give them more money. A head scratching response. Quite simliar in fact to Obamacare. Since Medicare is going to bankrupt the country, let's make it bigger. Huh?

I'm sure Santorum will be roundly criticized for this. Like I said, I'm no fan. But he has a point on this one.

Bill.

In Praise of Free Markets. A Partial Response to The Limits of Libertarianism

Eli,


In your "The Limits of Libertarianism," you say "voluntary transactions between equals in the marketplace are a wonderful ideal, but often a fantasy." I would say they are the norm. When I purchased my newspaper at the train station I had a high degree of confidence it would be there and how much it would cost. When I could get my newspaper on my iPad instead I arranged other equal transparent transactions with the NY Times and the Wall Street Journal. The three or four breakfast places I frequent have a quality and price I find acceptable and our transaction is open and transparent. I purchased an app from the Apple Store the other day and I knew going in to the transaction there was a risk of it not working, but I paid the $4.99 because I found the risk acceptable. Turns out the app doesn't work, but because Optimum blocks router ports, not because the app maker created a bad set of code. What I found in my app purchase was another reason to not like my cable company. If I could convince the rest of my family, we would stop buying cable TV video service and only buy Internet connectivity and maybe phone. Until then I reluctantly enter into a transparent and voluntary transaction with Cablevision. For dinner we had the food prepared from the grocery store, one of the three or four we frequent, and we engaged in transactions where we knew mostly what we would get and the prices were clearly marked. If I happen to McDonald's today I know what quality of food I'll get at what price. Like I said, I would argue most of the transactions in our life are transparent and voluntary.


As far as not all transactions being equivalent, you are referring to your "Health Care is Not a New Car or a New Coat." Why not? What makes it different? Because people need it? People need food. People need shelter. On Maslow's hierarchy of needs the most basic needs are breathing, food, water, sex, sleep, homeostasis and excretion. But you aren't arguing for public toilets.  (Yes, that is a joke). 


There are market failures. Clearly, there are market failures. And often-times there are failures that are blamed on the market but I would call policy failures. For instance, deposit insurance and bank regulation. I'm not going to argue deposit insurance and bank regulation are bad ideas or good ideas. Let's just look at the consequences. To protect depositors from bank failures deposit insurance was created as well as restrictions on what banks could do. Regulation Q restricted the amount of interest  that could be paid on checking and savings accounts. As interest rates rose with inflation in the '70's savings and loans (remember those) were squeezed because the rate they could pay for deposits were capped, so depositors moved their cash somewhere else. The policy response to this failed policy was to loosen up the type of deposits S&L's could take, resulting in a rush of cash used for real estate development, financed by S&L's in the states that seem to breed real-estate fraud: Texas, Arizona and Florida. Were there bad actors? You bet. Was there a market failure? Well in the economic sense, no, but for our purposes, yes. But was much of this driven by a policy that failed, replaced by another bad policy? Absolutely.


Look are our recent experience. Were there bad actors? Of course. Was there a market failure? I would argue yes, there was a run on the banking system, which was scary. Was some of this a result of bad policy? Absolutely yes. Deposit insurance gave banks a ready source of no-risk capital. There was an implicit guarantee of bail-outs of the banks and an almost explicit guarantee of bail-outs for Fannie and Freddie. There were market distortions from the Community Reinvestment Act. There was political meddling like Barney Frank's advice to roll the dice a bit, see here, and here. Throw in an excessively easy Fed policy replaced by an excessively tight Fed policy, driven by the hubris, that we can fine tune the economy. Add to it, a bunch of smart guys figuring out how to make money within the rules set by the Feds. Mix throughly, bake at 350. 


So if we create a law, to fix the failure of a prior law, that fixes the failure of a prior law, without ever stepping back and recognizing maybe the laws themselves had a role, a large role, in creating the negative events, then we are just spinning our wheels and we'll be having this conversation again in five, ten or twenty years.


Bill