Financial lesson from Europe

(The financial crisis has sparked more calls for oversight, so what European models could be helpful?) We need more regulation and oversight and all the Europeans have been more aggressive about that. The British model separates out the financial supervision from the central bank, which has also worked in Hong Kong. The Spanish model has had a real estate boom but has been responsible about people taking out mortgages who have enough money to pay for them. The German model is about as bad as ours. So probably we need to look at some combination of the Spanish and British models. (How would that look here?) Well with the Spanish model, there would be more transparency, having people be upfront about how much money a person in paying a mortgage. The British model is just more proactive. (Is there any movement towards these models right now?) Right now there's just a lot of confusion in the U.S. and all the emphasis is on crisis management. Some of these models have been discussed for a while. (How well has the U.S. done under de-regulization?) I think the U.S. has done well on crisis management and the U.S. has done well in some areas and not in others. Unfortunately it gets caught up in what one's bias is. there was some de-regulization in the 90s that was helpful. (The people who have lost their homes, would they be better protected if they were in Europe?) Yes, they would've been better protected from themselves. They wouldn't have been able to get into these loans. But there are also better safety nets for these problems in Europe. The U.S. consumer comes out ahead in being able to declare bankruptcy and not be tainted for life. (What safety nets exist in other countries?) Well in broad terms, in the U.S. if you lose your house you then lose your job, and possibly your health care though the next Congress could fix that, and you lose the ability to send your kid to college and your pension. In Europe, there are of course social divisions, if you lose your job and house, you don't lose your pension or the ability to send your kid to college and health care. The U.S. could learn from this.

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