Yesterday I blogged about Mike Konzcal's query as to whether banks should be allowed to identify customers with dementia and target them for tricky fees and other hidden charges. I answered that it's wrong, but it might actually be hard to craft legislation that prevented it. But of course, this actually assumes that targeting customers with dementia would work. Today, an employee of a major bank emails:
About Andrew's post on ripping off old, demented, credit card customers I'd like to point out that this would be not so much evil as really REALLY stupid. Since credit card debt is unsecured, the credit losses on this scam would be enormous and would definitely lose a lot of money. Nevermind the moral aspect of this, the financials for such a program would fail miserably and anyone suggesting such a program would be scorned not just for being an immoral jerk but for having zero business sense.
I'd say it would also be evil, but yes, probably really stupid too. Which invites the question: what if we turn it around? Should banks be allowed--nay, encouraged--to use such a quiz to pick out customers they no longer care to do business with? After all, we'd be protecting potentially demented customers from hurting themselves.
Of course, we'd also be potentially preventing non-demented customers from getting credit--given my work schedule, I not infrequently forget which day of the week it is, and when you're retired, one day can easily shade into another.
Too, the AARP would freak out the way they do when anyone suggests that maybe people over seventy should face a little extra scrutiny over their driving abilities--which is why a few years ago, I got hit by a fairly clearly demented 80-year old man in a Target parking lot. He still had a driver's license and car insurance even though the cops told me he'd had two accidents in the same parking lot over the last few months. But (as in my case) there were never any witnesses, and he always accused the other driver of fault, so the accidents always got judged no fault, and he kept his ability to drive even though his wife, his insurance company, and his township all clearly knew that he shouldn't be behind the wheel.
There would complaints from consumer activists, and angry articles about "credit discrimination" against the elderly, featuring spry eighty year olds with no obvious mental disease or defect. Left-leaning bloggers would complain that banks were protecting their profits at the expense of old people who had paid their bills all their lives, and showed no sign of imminent default--all the complaints that have been leveled at banks that cut the credit lines of people they judged likely to run up debts and/or default.
Yet this is the logic of paternalism: you discommode a large number of people in order to save other people, possibly a smaller number of other people, from financial distress. Methinks, however, that many people who like government paternalism would view it differently if it were done spontaneously by banks out of profit motive.