The Consumer Financial Protection Agency

The current crisis is a crisis of misaligned incentives and the rational response of consumers and lenders to those incentives, not a crisis of mass consumer ignorance and exploitation. While some financial terms and products and the correlating regulatory environment impose substantial risk and dangers for buyers and lenders alike, they do not, on the other hand, pose consumer protection issues. The creation of a Consumer Financial Protection Agency will not prevent, but actually exacerbate, the structural incentives that produced the current crisis.