Should there be a public option for the credit market?

[realisticidealist]

Basically, should individuals be allowed to borrow from the Fed like banks do, especially in times when banks refuse to lend their excess reserves?

[greenforest32]

I've been wondering about this too. It seems like a very direct way of getting credit to individuals compared to letting the private banks run everything and having public bailouts of said banks not help the public very much.

[opebo]

Yes, there should only be public options - the fiction of 'private' ones should be discontinued.

[Vosem]

No.

[realisticidealist]

No.

Care to elaborate?

[True Federalist]

No.

Care to elaborate?

Hell no!

[So rightwing that I broke the Political Compass!]

I think the opposition is entirely due to your having used the term "public option", guaranteeing that the forum conservatives would automatically oppose the idea.

I can't think of any compelling reason not to extend availability.

[Yelnoc]

I can see such a system being used as a political ploy to win votes, while contributing to the deficit (extending credit to people who should not be eligible for it, etc).  Of course, that's run of the mill with "social programs", so why not?

[cavalcade]

I struggle to see how the Fed would be better at making profitable consumer loans than private banks.  It's really not in their wheelhouse.  Are they legally prevented from doing so?

[© Tweed the Younger]

I struggle to see how the Fed would be better at making profitable consumer loans than private banks.  It's really not in their wheelhouse.  Are they legally prevented from doing so?

the idea would not be to turn a profit

[Torie]

It sounds like crony capitalism gone wild.  Just why anyone would think the government would engage in appropriate underwriting without politics getting involved, and the program not ending up being a Fannie Mae like fail on steroids, escapes me.

By the way, the government has a cost of capital too, so the government doing it at "no profit," while sucking up some uncompensated risk, means that it is a subsidy to the borrows right off the bat. In economics lore, a "normal" profit means that amount of expected return which will attract capital to cover the higher risks involved that just buying short term treasury bills (the risk free rate), and no more. "Profit" is all too often treated as a dirty word, which is unfortunate. It is what makes the world go round.

[Redalgo]

I've been eying this thread with curiosity since it was started because for a few years now the idea of having a single, national card for personal credit and debit has been attractive to me. I wonder about the borrowing of businesses in a similar respect too but am reluctant to lay out an argument one way or another, seeing as I've never heard anyone authoritative discuss the pros and cons of such a course of action.

[So rightwing that I broke the Political Compass!]

It sounds like crony capitalism gone wild.  Just why anyone would think the government would engage in appropriate underwriting without politics getting involved, and the program not ending up being a Fannie Mae like fail on steroids, escapes me.

This is what's already happening though- the Fed already makes loans to the banks. You may have a point that extending the availability magnifies these problems(while also magnifying any advantages), but these would quantitative rather then qualitative changes.

Most(informed) people seem to consider the Federal Reserve's lending to banks a net positive, despite the crony capitalism and political considerations that distort it's practices. I don't see why that shouldn't be so for comparable lending to individuals.

[opebo]

Just why anyone would think the government would engage in appropriate underwriting

You think 'private' business does this??

[Torie]

Just why anyone would think the government would engage in appropriate underwriting

You think 'private' business does this??

Is the Pope Catholic? Sure, relatively speaking.

[stegosaurus]

This is based on the assumption that the Federal Reserve is a public entity. This is non-truth.

[Progressive Realist]

"Profit" is all too often treated as a dirty word, which is unfortunate. It is what makes the world go round.

Ummm..............

[realisticidealist]

This is based on the assumption that the Federal Reserve is a public entity. This is non-truth.

Well, it's more of a half-truth. The Fed is a hybrid institution.