Repeating incentive failures

My Google news homepage tells me that the U.S. to increase pressure on mortgage industry. According to the article:

The Obama administration said Monday it will crack down on mortgage companies that are failing to do enough to help U.S. borrowers at risk of foreclosure, as part of a broad effort to ramp up participation in its mortgage assistance program. The Treasury Department said it will withhold payments from mortgage companies that aren’t doing enough to make the changes permanent.

I mention this just in case it wasn’t clear that the “Obama administration” has forgotten every economics class it ever took from people who know better.

Remember six months ago? The “Obama administration” doesn’t seem to. Remember when it seemed like all the banks were failing and screwed? Remember how that wasn’t actually true? How some banks were doing just fine, because they didn’t make stupid loans? Remember how those banks were given crappy ratings by the government due their fiscal responsibility? Oh… you don’t?

Well, consider Massachusetts bank East Bridgewater Savings. Back in March, when all the banks were going to hell, East Bridgewater Savings was doing fine:

Bad or delinquent loans?




Money set aside in 2008 for anticipated loan losses?


“We’re paranoid about credit quality,” Petrucelli said. The 62-year-old chief executive has run the bank since 1992.

East Bridgewater Savings ended 2008 with $135 million in assets and deposits of $84 million.

The bank even squeaked out a profit of $87,000. And its Tier 1 risk-based capital ratio was 31.6 percent, or more than three times higher than many community banks in Massachusetts.

In other words, rather than do the “predatory lending” and “sub-prime” shenanigans that the government and media would lead us to believe caused all this trouble, this particular bank only made reasonable loans, and avoided the problems entirely. But, for its trouble, the FDIC “slapped East Bridgewater Savings with a rare ‘needs to improve’ rating after evaluating the bank under the Community Reinvestment Act.”

The CRA is a set of laws that have been revised over the past 30 years to “encourage” banks to lend to local, low- and moderate-income borrowers. Because East Bridgewater Savings judged that giving loans for large houses to low-income families was not worth the risk, the FDIC essentially published a statement saying they were a bad bank.

Now, it is unlikely that the banks pushing subprime loans did so to avoid this FDIC ranking; they probably would have done it anyway. But it certainly is not particularly useful that, should you want to manage risk correctly, the government will tell the world you are an idiot for doing so. It is a totally misdirected incentive.

This current push from the Obama administration works in a similar way, offering incentives to force exactly the wrong kind of behavior.

Reasons to heist Shove Box

You may have heard that there is a new MacHeist in the works, this one offering six applications for free. While I don’t post about these things very often, the peculiarity of one of the apps in this bundle warrants some explanation (and praise). After warming up to it a bit, I use it quite a bit, so thought I’d recommend it to everyone, particularly iPhone users.

The application is Shove Box, and it is a little hard to explain. It is pitched as a “nicknack box”, where you put stray stuff that you want, but don’t have a great place to store, like text snippets, sticky notes and that kind of thing. Personally, I don’t really find that all that interesting. Instead, I’d pitch it like this: it provides an extremely easy method for syncing random stuff for viewing on your iPhone.

So, for example, say you have a PDF or e-mail of a hotel reservation, or your flight information, or whatever. You drag it into the Shove Box, launch the companion iPhone app, the data syncs, and you can view whatever it is on your phone. So, when the check-in person asks you for a confirmation number, it’s right at your fingertips. Maybe there is a single paragraph of text on a web page (like an address or confirmation number or something). You select it, drag it into the Shove Box, launch the companion iPhone app, the data syncs, and you can view whatever it is on your phone. This also works with webarchives, rich text, images (for some reason, I use it for maps a lot), URLs and a bunch of other stuff. I keep webarchives of reference material on HTML entities, web colors and so on.

Naturally, the iPhone app costs extra (normally $4, but only $2 until 9 Nov 2009), but getting the Mac side of it for free makes this a much better deal. The interface element is built around a menu that is added into the right side of the menu (with the clock, wifi status and so on). The menu works like a typical menu, but also as a drag and drop target. This pretty jarring at first. It’s definitely not like other apps. Just like my experience with Quicksilver, I wasn’t that enthusiastic about changing my ways to use it at first, but it has now changed the way I work for the better.

End of an era

During and after college, I invested a whole lot of energy into the setting and game of Shadowrun. About all I have to show for it is a large shelf of books that hasn’t really been touched since I moved into my house six or so years ago.

So, I’m selling it all. (And also, some separate fanzines.)

Well, I am keeping a few things. I’ll keep my limited edition hardbacks from third and fourth edition (and the new 20th Anniversary limited edition, if it ever ships), hardbacks from 1st and 2nd edition, an extra copy of the greatest gaming aid in the history of man, and the Denver boxed set. And memories, I guess. And PDFs.