Protect Us from Financial Innovation

Ken Jarboe at the Athena Alliance had more to say here about financial innovation and also links to an article here from last year by Professor Elizabeth Warren of Harvard Law School who suggests the need for a  “Financial Product Safety Commission” saying “If it’s good enough for microwaves, it’s good enough for mortgages.”

I recently posted here about Much Reviled Financial Innovations. My point is that we cannot blame the technology of financial innovations and throw it away. But we should blame the people that are hawking poorly developed versions of the innovations. What Jarboe and Warren are saying is related: we need to be very systematic about looking under the hood of these innovations. Process and technology are intertwined in the intangible economy and we have to get better at analyzing both.