Another Role for Consciousness

If we don’t have to do something, it drops out of our minds.  We forget.  Consciousness needs incentives to work, and this is true as much in paying our bills as it is in guarding national borders – or protecting consumers.

Elizabeth Warren, Chair of the Congressional Oversight Committee set up to suggest reforms to our financial system, reminded us of this in her recent interview with Charley Rose in BusinessWeek.  “There’s nobody in Washington focused on the economics of the family, focused on the consumer products—credit cards, mortgages, car loans, overdraft fees. All the stuff you have to do in your daily life to survive economically.”

She points out that the relationship between consumers and banks used to be relatively simple.  But then, driven by increased competition, banks got creative and began to think more about what they could do to improve profits:  “We could hold up free gifts. We could hold up a warm and fuzzy relationship. And then we could put what are called in the trade revenue enhancers back in the fine print, and we could make a lot of money because you won’t figure out what this product costs. So that one-page credit-card agreement in 1980 has now grown to about 30 pages. And it’s not just 30 pages, it’s 30 pages of incomprehensible fine print.”

In arguing for a Consumer Protection Agency to think about such matters on behalf of consumers and monitor the behavior of banks, Warren notes: “This is an agency that just makes sense. This isn’t liberal or conservative. This isn’t a division of ideology.”  She adds, however, “You’ve got to have an agency that’s ultimately independent, whether it’s located within the Fed, within Treasury, within the Department of Agriculture, or whether it sits in its own separate place. The key is whether or not it is functionally independent.”  See, “Elizabeth Warren: Outrage and Financial Reform.”)

One argument in favor of lobbyists is that they keep legislators and government agencies informed of their clients’ changing needs.  To be sure, that is not without pressure or the desire for influence.  But in a complex society, that can be useful.  Similarly, an agency, set up to think and reflect on consumer issues in banking, can add to the store of information, trends and issues that a typical congressman might not otherwise notice or think about.

What we don’t know we know about regulation is the daily effort it takes to stay focused on any issue before it fades from our minds.