Here’s a great article about the call for tough rules on financial instruments. The sub prime has done us a great favor, it highlighted the problems with our financial institutions in a way you can’t hide. Take the credit score for example, how many people actually know how this thing works? Very few, the company that created it, Fair Isaac, doesn’t share how it calculates your score and it is left to only a few who know the real magic to it. And that’s what it is, we are no different than people 2,000 years ago going to wizards and oracles for advice, the credit score is no different.
Here’s how, in the old days, a leader would consult a wizard who was the only one who know the mysteries of their trade. Today our financial institutions consult the credit score by Fair Isaac of which only they know the mysteries of the credit score. I think we should have the employees over there wear robs and long pointed hats, kind of go all out. But lets not just pick on the credit score, there are a lot of other tools out there fall into this category or similar category. A call for tighter financial watch dogging is a very good idea, that is, as long as the watch dogs are truly watching and truly doing their job to protect, not just another window dressing program while it is business as usual behind closed doors.