What Does a Broker Say?

One advantage to posting on CreditSlips is that I get a lot of people who try to help me understand things.  I had a long, interesting conversation yesterday with a person who has been a mortgage broker and who current trains mortgage brokers. He said, "If I go to Macy's and they have a shirt for $60, and I go down the street to Sears and they have the same shirt for $40, it is up to me to figure out that I should buy the $40 shirt. Why is it different with a mortgage broker?" 

Why indeed?  In fact, as we talked, he--the broker--came up with five big differences:

Agents have responsibilities to their clients that sellers don't have. Most people think a mortgage broker is acting on their behalf, like a lawyer or doctor. Mortgage brokers foster that understanding ("We get the lowest rate for you!"). A lawyer, for example, can charge a client a high fee or a low fee, but she can't take money from a person whose interests are adverse to the client to harm the client. 

It costs a lot of money to make the comparison. Mortgage applications and locked in rates are expensive. Unlike my trip to the next store in the mall, which costs only a little time, it can cost borrowers hundreds or even thousands of dollars to get a firm price on a mortgage. At Macy's, the costs are out front.

Price comparisons are hard. Comparing the economics of ARMS, neg-ams, no-docs, and other exotic instruments can be very complex.  A bad broker can make more expensive loans look cheaper. At Macy's the prices are easily understood by all buyers.

Disclosures come too late. YSP disclosures are made at the closing.  The buyer can request this information 24 hours before the closing, but most don't. Even if they knew to ask, 24 hours is too little time to arrange alternate financing. 

Disclosures don't explain the economics of the transaction.  The points are disclosed, but not how they are earned (e.g., for this mortgage, the lender paid the broker 3 points and added it to the mortgage; for other products the lender would have paid 0-2.5 points).

Let me say this again:  this is what the mortgage broker identified as the places where the analogy to comparison shopping breaks down. He said that some states have regulations that will cause some variations, but he thought this was pretty much true nationally. He also said, "The customers cannot tell a good broker from a bad one." 

It was an interesting conversation. 

Comments

[JKB]

And yet mortgage brokers have resisted the creation of an enforceable fiduciary duty to their clients.

But it all seems to be unravelling. The Boston Fed found some interesting trends when they examined subprime. Outlined on Bloomberg (link below). Seems of late quite a few of the subprime borrowers had FICOs that would rate them a prime mortgage. Looks like a need for the researchers to dig into what the brokers have been doing. I wonder if brokers will appreciate the opportunity to learn from the past?

http://www.bloomberg.com/apps/news?pid=20601039&sid=anxOH4nv1deE&refer=columnist_berry

The FRB chairman speech:
http://www.bos.frb.org/news/speeches/rosengren/2007/101007.htm

[Brian]

At least Brokers disclose at closing, unlike banks or other entities. Lawyers all charge different fees so do doctors this is called Free enterprise.
The bottom line is this, is the rate the client receives competitive with bank or other entities that provide mortgage loans. The answer is yes in most cases! As for bank or direct lenders, Countrywide a direct lender is under investigation for overcharging, they are not a Broker. As in any industry there are cases of fraud or abuse , as show by Countrywide Banks are not immune to such activity. From my experience I can beat retail bank any day of the week, and we disclose the profits. It seems by your posting, you don't yet understand all the complexities of mortgage lending.

[banker07]

Yet another financial "expert" giving an uneducated dissertation on the bad mortgage broker. If Ms. Warren were truely financially savvy, she'd know comparing dollar mark ups on rates compared to Macy's sweaters is proposterous. Compare in percentages. Like 1-2% for the broker compared to the 40-100% mark up for the retail Macy's product. Seriously, Ms. Warren is another "expert" to jump on the bandwagon. If you want to blame anyone for the subprime meltdown, blame the banks themselves and Wall Street for creating, backing, underwriting and funding these loans. And as for ysp, rather than turning the tables on brokers who do actually disclose, perhaps ask why the banks DON'T disclose their srp/ysp.

[Steve Dibert]

Ms. Warren,

Obviously, you haven't read any of the posts or emails you received from the hundreds of people who have responded. Banks charge YSP just like brokers do. However, banks don't legally have to disclose that they are charging it. Again, when I charge a YSP to a client, my rate is still cheaper than the retail rate the bank charges. If you are so concerned about disclosure of YSP, why are you not going after banks? Or is this simply a case of academic arrogance or "Don't confuse me with the facts, my mind is made up!"

You mentioned that mortgage brokers should educate the consumers about the economics of a mortgage. That's fine. But do you discuss your salary to your students? Do you educate them about the economics of how their student loans are used to pay your salary? Do you explain to them that if they defer their student loans until after they graduate, that the the price of secondary education at Harvard nearly triples. If you don't, isn't it hypocritical to launch an attack on mortgage brokers using flawed or inaccurate data?

I emailed you earlier challenging you to a public debate about the accuracy and validity of your Op-Ed piece. I challenge you again. Let's have a public debate about your Op-Ed piece. You name the place and the time and I will be there! But you'll probably hide behind your many assistants or the Ivy covered walls of Harvard. If you can back up your empirical data and truly believe what you are saying then you should win a debate. Or are you afraid your data is flawed and you'll embarrass one of the most prestigous universities in the world. I await your answer.

Steve Dibert

[Todd]

Comparison shopping for a mortgage is simple. It all occurs on 2 forms that must be provided to the borrower by the broker within 3 business days of the initital credit decision. These are the Truth-In-Lending (TIL) and the Good Faith Estimate (GFE).

The GFE will disclose all costs involved with the loan. This includes everything from discount points, processing, and underwriting fees to other fees having nothing to do with the broker, or lender, such as appraisal, survey, title fees, etc.

The TIL will show the Annual Percentage Rate (APR) taking into account the fees charged on the GFE that have to do with the origination of the loan.

It will also show monthly mortgage payment amounts, including those that may increase in the future if it is an Adjustable Rate, or Balloon Note payment.

People can, and do shop for a good mortgage. I am approached regularly by clients with GFE's and TIL's in hand from our competition. If I can beat my competition, I Will. They are also free to take my GFE and TIL to our competition and see if I can be beat. It is called the "Free Market". (I think the free market has made it to Boston.)

Those who do not do their homework and do not shop may not end up with the best deal. It is true whether we are discussing a mortgage, a new car, a doctor, a lawyer, or a can of beans.

We do our best to educate our customer to the mortgage process and present them with options that they are free to choose from, or walk away from.

Is this of importance? Of course. We are dealing with peoples homes and financial futures.

But it is the same individual that pays too much for a car, or a can of beans that pays too much for a mortgage. It comes down to simple financial literacy.

In the end, we are prevented by Federal Law for overcharging for a mortgage. Even our lenders set limits on how much we are allowed to make. And frankly, it's never as much as the Real Estate Agent is able to make. (And yes, I am a reformed Real Estate Agent. I can tell you first hand; originating, processing, and delivering a loan is much more work than selling the home.)

Professor Warren, I invite you to spend a day in my world to see how the mortgage process really works. Don't sit on your academic perch and spew accusations about a subject that you do not fully comprehend.

[Ify]

Mrs. Warren:
We will appreciate it before you write a on a topic of such important that you check your facts.

[bailey]

Ms. Warren. Obviously there are many mortgage brokers with extra time on their hands these days. I expect the numbers to grow. Good Job!

[Carl Pruitt]

The Fed research and Bloomberg quotation cited above are more notable for the other information they provide. First, the study indicates that foreclosures are disproportionately related to multi-family properties. My own experience of the market in my area and items from the local paper indicate that a great proportion of the single family foreclosures are non-owner occupied properties as well. In other words, a large part of the foreclosure problem involves more sophisticated borrowers who should be able to look out for themselves or they shouldn't be in the investment property business.

Second, the Fed research noted in passing an enormous hole in the middle of the "could have qualified for prime" reasoning when they said "They may have been in subprime products because they chose to make a highly leveraged home purchase, or they may have been steered to a more costly mortgage for which they might have otherwise qualified." They also may have been self employed and not willing to produce tax returns, or their debt ratio may have been higher than could be approved on a prime loan, or any of hundreds of factors other than credit score which influence the approvability of the file.

Third, according to the article "the Bank’s research shows that the duration of a subprime mortgages is on average quite short – for a sample of subprime mortgages used to purchase a home between 1999 and 2004, two-thirds have prepaid within two years and almost 90 percent have prepaid within three years." In other words, many thousands of borrowers got these loans and did well with them.

The subprime crisis going on right now was caused by a credit crunch when these loans could no longer be securitized. The credit crunch was primarily caused by the fact that the financial institutions which gave ratings to the securitizations, and whose ratings the investors relied upon, failed to measure the risk properly. It isn't being caused by the brokers being paid yield spread premiums. Property values are going down because the credit crunch has taken a sizable segment of potential buyers out of the real estate buyer's market. Now the credit crunch is making it difficult for borrowers to refinance.

Everyone wants to live in a world where no one gets taken advantage of, or sold something that is inappropriate for them, or makes a decision that 20/20 hindsight proves was wrong. But that isn't reality. It is very easy to sit here with what MIT Economist Arnold Kling referred to in a recent article with the psychological term "hindsight bias". Now that we have a problem, everybody saw it coming all along but nobody would listen to them. Yes, there are many who predicted a problem in the mortgage industry, but most didn't predict and still don't fully understand the cause.

As a Libertarian of long standing, I would approach the issue from the "other side". The world cannot be made perfect or perfectly safe. Over-regulating or establishing some silly and ethically impossible fiduciary duty around the placing of mortgages by brokers would solve the problem only in the minds of utopian dreamers. I am amazed that people continue to turn to the government for answers when everyone knows deep down that government doesn't do a good or effective job with anything. Borrowers would be much better served if everyone just understood that each person has a duty to watch out for themselves in every area of life, mortgages included. No advanced financial degree is needed to determine whether an adjustable rate mortgage or a fixed rate mortgage would be a better option. People get led down the wrong path by bad elements of the mortgage industry because they think all the massive government regulation is protecting them. If they wanted to know more about the mortgages they are considering, all they have to do is listen to or read articles by the massive number of consumer advocates I hear on the radio and see in print every day. As a matter of fact, on refinance transactions they have an additional three day rescission period after closing to show their loan documents to their friends, their attorneys, their pastor or anyone else to make sure they didn't get hoodwinked. But they don't do it because they have been raised to mistakenly believe that the government is protecting them.

There are many problems in the mortgage industry. There will be many more. The original article and the rebuttal here are barking up the wrong tree for the solution and unnecessarily implying that many good people are crooks instead of really looking with an open mind at the problem.

[Steve Dibert]

JKB,

Just because someone has the FICOS to go conforming doesn't necassarily mean they qualify for a conforming program. Debt-to-income ratios play into it. As do job history, crdit history (some people can be 6 month out of Chapter 7 and still have 650 or 680 FICO or less than 3 years out of a previous foreclosure), previous rental history, etc. Fannie Mae has had to steadly increase their DTI limits in the past 10 years to stay in pace with consumer debt. It has been increased from 36% in 1999 to 46% today. Yet most Americans are so debt ridden they had to go sub-prime where the limit was 55% even with stellar credit.

Steve Dibert

[Brian]

At this point, it is obvious that Ms Warren is trolling for blog hits. Her arguments document a complete lack of knowledge regarding the subject matter and a total disregard for accuracy. Is there really anyone out there that the misguided professor is really helping with fabricated scenarios and inflamatory accusations? Based on her op-ed and follow-up posts, I can honestly say there would be ZERO chance that I would read anything she has to say, regardless of the topic.

Time for No Professor Left Behind.

[distracted]

I'm really shocked by many of the broker comments here. Mr. Dilbert continues to argue that banks don't disclose YSPs to borrowers, so why should brokers, *if* the broker is getting the borrower a better rate than the bank?

After working in wholesale home equity for a national bank for two years, it could be true that a broker got the borrower a better deal than the bank offered directly. However, the majority of the time that wasn't the case. What's more, the brokers generally steered their clients to loans that got the broker the most money, not the best rate or even product for the borrower. I can't tell you how many times I had brokers tell me they were going to another lender who paid a higher YSP, despite the fact that we beat that lender's rate. Until our bank's policy changed, we had brokers taking rebates on loans that made them only $50 on the backend, but upped the borrowers rate by .4%, which ultimately the borrower would pay much more for over the life of the loan. I'm guessing if the borrower had had this explained to him by his broker, the borrower would have just paid the broker the $50 upfront. The point here, that I think the brokers are missing, is not that the author or others like myself think brokers shouldn't make money. You can and do charge points up front for your work. However, the reason a borrower goes to a broker and not a bank is so that they can get *the* best product and overall rate which brokers advertise--borrowers hire someone with more knowledge, experience, and connections to get that for them, and they pay the broker for his services. However, in the mortgage craze, brokers lost sight of their clients and automatically latched onto lenders where they got paid the biggest YSP. Period. In my book, that's not only an illegal kickback in violation of RESPA, it's a breach of fiduciary duty.

[Ryan Merritt]

Ms. Warren,

I am glad you are courageous enough to continue posting about this topic. Fortunately for you, I think you are beginning to see that you have taken up a cause that you are neither capable of nor knowledgeable enough about to fight for. Your initial article and your subsequent posts only further that fact. Many of my peers have expressed to you in great detail, and in much better fashion than I, the inaccuracy of your information yet you still do not admit that you were wrong or that information was wrong or worse flawed in any way. You use dated information and try to call yourself an expert. You speak with supposed industry experts yet you still remain misinformed. Or could it just be that your motives are otherwise?

I can agree with you that we as an industry can do more to police ourselves, and we are making great strides to do so as an industry. However small minded individuals, such as you, that would propose themselves to be experts do not help the situation either. Most of us are true professionals in every sense of the word. We provide a great service and much needed advice to consumers that are most in need. And just like any professional, we are to be paid a reasonable wage for our knowledge and service just as you are.

In the spirit of fairness, answer for me this question. Do you inform your students what you are paid prior to them taking your classes? No you don’t! Yet they expect to get good quality course work from you so that they may learn and educate themselves. What if they don’t feel that they received the quality of learning that they originally anticipated? Do you refund them their tuition? I would gather that it just isn’t possible. Yet you still get paid.

Your ignorance and lack of knowledge is both foolish and disrespectful to the mortgage broker. I would ask that you formally apologize to every mortgage broker in general. In doing so, I would also ask you to take the time to learn our industry or at he very least how the backend of the credit industry works. Whether you realize this or not, YSP is paid on almost every piece of credit that is granted in this country. You being an expert on credit I would have thought you already knew that though. Loans on cars, boats, motorcycles, planes, and every thing else that is securitized pays some variation of YSP. Yet the mortgage broker is the one that should be the fall guy for the practice. YSP, SRP or what ever other variation it may take is the way business is done everyday across a wide range of financial industry. The mortgage industry is the only industry required by law to furnish the information to the borrower or client before the transaction is completed. So tell me, if that is the case is it the brokers fault or is it the borrowers?

At the end of the day all that matters is that the borrower or customer is happy. If a customer has shopped around they will get the best deal available to them for their given situation. If it happens that I am able to give them that best deal or rate, does it really matter at that point if I am being paid for my service? The answer will always be no because I, as a professional mortgage broker, deserve to be paid for my advice and services. The matter of payment is semantics.

Lastly, before you write another piece about our industry I encourage you to speak with industry leaders, not some guy who trains mortgage brokers and compares our industry to buying a T-Shirt. That right there should have been enough for you to stop the conversation and move on to a better source. C’mon T-Shirts at Macy’s, surely someone with your background and schooling realizes that even the transaction itself by its very nature is not comparable. I would be more than happy to enlighten you about our industry and it’s inter workings. It appears as though you can still use it.

BTW I would like to point out some of your inaccuracies.
1. Even a bad broker wouldn’t put an individual in a 9% ARM (which is most likely a par rate…NO YSP) when they can be paid YSP on a 30 Year Fixed rate at 6.50% if the borrower qualified for it. It would make no sense to do so.
2. Every banking firm in this country offers YSP (BofA, Citi, Wells, WaMu, Commerce, Chase, etc.) not just mortgage companies.
3. YSP is disclosed to every borrower at the initial signing of any disclosures of their Good Faith Estimate. However a borrower does not care about YSP they care about their rate, the payment and what their closing costs are.

[Mahlon]

Ms. Warren is getting attacked rather harshly today. I smell a concerted effort. Not that there's anything wrong with that, any more than there is anything wrong with Ms. Warren's views. I normally am one of the ones attacking posts on this site, but on this one, Elizabeth, I've got your back.

Gentlemen - I understand that many in the industry do things properly. Many, however, do not. Don't tell me the current situation was not aggravated by brokers. Not all of them - some of them.

As an attorney, I have reviewed hundreds of loan files over the years. At least half of them had YSP's on them. Only once have I seen a YSP properly disclosed and properly used. Maybe all of you properly explain how a YSP works, show the difference in rate and payments over the life of the loan, and use it only where the borrower prefers a higher rate to financing your fees. Yes, the lenders should be outed on this issue, too. They encourage brokers to act in everyone's best interest except the borrower. But you, the brokers, are the ones who communicate with the borrowers. You are the ones whom the borrowers think are working for them. Whether you like it or not, yours are the hands that get dirty. And when your hands get dirty, money usually goes into your pocket. Listen carefully - you need to make money. It's how you make it that raises the concerns.

Let's talk reality. Yes, anyone with a reasonable amount of financial acumen should be able to comparison shop for a mortgage. Note that caveat in there. The reality is that a majority of those in subprime loans do not have a reasonable financial acumen. They're idiots. You can disclose anything to them and it won't stick. Many of these people shop based on payment, rate, and cash out. Many of them are in financial straits. They are incapable of understanding the real cost of the loan. Is that the fault of the broker? No. But what is the fault of brokers is that some of them take advantage of the situation and abuse the hell out of these people.

You can point out areas in which Ms. Warren is wrong, but you, as an industry, need to look in a mirror. Criticism of brokers is not unwarranted. Your industry deserves much blame. If you are concerned about the rotten apples ruining the entire barrel, you should police yourselves. If you don't, someone else will.

Oh, Mr. Merritt, your analogy about Ms. Warren's class being advised about her pay is laughable. Her students didn't come to her for advice about choosing the right law school to attend only to find out the one she recommended paid her money on the side for the referral, or gave her a kick-back when she sold the student higher tuition than is normal. Think things through before you attempt that type of attack.

Be honest, guys - with yourselves, at least. I find Ms. Warren to have an across-the-board, negative knee-jerk reaction to businesses involved in lending. That does not mean, however, that she is completely wrong.

[Steve Dibert]

Ms. Warren,

I'm still waiting for a response from you regards to an open and public debate about your Op-Ed piece. If you are the skilled and knowledgeable advocate you claim to be, then you should have no problem defending your position in your Op-Ed piece. Was this Op-Ed piece payback because you got treated unfairly by a broker or because you didn't throughly read your documents before you signed them and later found out the broker got paid YSP? Or, as a previous poster suggested was this was an attempt to increase your prestige among your collegues? Again, name the time and place and I will be there. We can even have it within the walls of Harvard if you like.

Let's be honest you won't respond and you won't debate the issue. Like most elitist academics who can't handle the real world, you'll hide behind your many assistants or make up some excuse about your schedule. We both know you won't debate this issue in public because when it is revealed you wrote this Op-Ed piece for personal gain and used flawed and inaccurate information, you'll have given one of this country's most presigious universities a embarrassing black eye.

Steve Dibert

[Ryan Merritt]

Mahlon,

While your point of view is correct in many ways, the topic of discussion is not necessarily our industry but rather an ill advised individual informing the public about an issue that she knows very little about, but claims to. The same situation could be derived, all things being equal of course, by me writing an article in the New York Times about the unethical practices of attorney's. My background would certainly be called into question and I would garner a very similar response.

It is the short sightedness of individuals such as Ms. Warren that perpetuate the problem. For as much as we are reacting with emotion she too reacted with emotion by writing the article without doing a fair amount of research. Can you sit there and honestly tell me, you being an attorney in the real estate industry, that her piece was accurate and balanced? I think the many posts and articles that were written have proven otherwise.

To further my point the consumer, that you have dumbed down and called an 'idiot', has proven you otherwise as shown below in a case study done by the FTC, a little organization called our government.

http://www.ftc.gov/be/consumerbehavior/docs/LackoPappalardo.pdf
http://www.ftc.gov/opa/2004/02/mortgagerpt.shtm
http://www.ftc.gov/os/2004/01/030123mortgagetextofrpt.pdf

In various case studies the borrower has proven that 90%, let me say that again, 90% of the time can pick out the less expensive loan. So tell me how is that I should look myself in the mirror when someone accuses me of taking kickbacks and bribes? YSP, SRP or what ever variation it may take is paid on a wide range of credit products in this country. It is a practice that is not exclusive to the mortgage industry. How do you think car dealers are paid? Do you think they make money by selling you the car at $300 over sticker?

My frustration with the situation is that Ms. Warren clearly did very little research on the subject. It would behoove her to think twice about writing future articles without doing the necessary research.

While the practice of YSP, SRP or its many forms can be abused, it is meant to help provide a way for homeowners and potential homeowners to better themselves financially. The same can be said for attorneys and frivolous lawsuits. In just about every form of business you will have less than scrupulous people. Like you mentioned, that does not mean that we are all bad people. In fact, we as an industry have made substantial strides in policing ourselves. So before you start throwing stones be aware that you are in a glass house.

BTW, last time I checked students had the ability to pick their courses!

[Marie C.]

Mortgage brokers get caught:

"The indictment alleges Schneider and his company took part in 67 fraudulent real estate transactions, and that Schneider and others made more than $1.8 million from the deals, including approximately $160,000 in brokerage fees that went to Schneider’s firm, along with $200,000 in kickbacks."

http://www.sj-r.com/News/stories/17407.asp

[Jay Wiedwald]

One factor that seems to be missing in the $40 shirt vs mortgage loan "purchase" discussion is the stakes involved. Who hasn't brought home a shirt, looked in the mirror and cringed at how we looked in it? Maybe we took it back, maybe it went to a hopefully appreciative relative or friend, or maybe we just wrote it off as a poor decision and passed it on to the Salvation Army. But how often do we make a decision that is going to cost us ~40% of our paycheck for the forseeable future, as well as lock us into a situation that if any of a number of events occurs (job loss, illness, accident,...) could drive us into bankruptcy?

Perhaps the mortgage broker doesn't hold a fiduciary role in a legal sense, but most customers depend to a great extent on the implicit expertise that s/he has, and no broker (or any salesperson) will discourage a client from believing that they are working in the client's best interests.

On two occasions I have used a broker to refinance my home (both in the distant past). Both times the broker certainly implied that she had my interest at heart. As one inexperienced in the mortgage process (three loans in 25 years) I pretty much followed along with what the broker said. It worked out OK for me, but the loan options back then were basically, "Do you want a 15-year or 30-year fixed loan?" so apples-to-apples comparisons were possible. The options available in the current mortgage market would have made my eyes glaze over and, rightly or not, I would have depended even more on the advice of the person presenting him or herself as working for me.

[Mahlon]

Mr. Merritt - I thought I made it clear that I often find Ms. Warren, and others who post on this site, to be knee-jerk in most of their analysis. (I'm also a consumer debt collection attorney. That industry is treated none to well here.) Challenging her on her facts and conclusions is fair game. All I am saying is that there is an issue here and it does no one any good to ignore it.

I chuckled at your statistic about 90% of people being able to pick out the low-cost mortgage option. I'm sure they can. But you know the saying about statistics and liars. You also know that is not the issue. The issue is manipulation and abuse of the borrower. I'm not really talking about those loans in which the borrower made an informed, but poor, decision. Fine, 90% of people can pick out the low-cost mortgage. Ten percent of the people offer a very large target upon which the unscrupulous can feed. Ten percent of the American mortgage market puts a lot of money in play.

By your writing, I can tell that you are an educated, thoughtful man. My guess is that you have never had to, or been tempted to, resort to the tactics of which I speak. Remember that the broker-originated loans which don't fail, or which were appropriate never darken my office door. To reach me, a borrower has to realize or learn many things: (1) there is a problem (these are not the brightest people - sometimes this never happens); (2) there may be something that can be done (again, most these people allow life to happen to them - self-determination is a foreign concept to them); and (3) there is someone to help (ditto - these people don't know where to go for help).

The point is that only a rare few make it to me. And those are not necessarily the most abusive loans. That said, I have seen abuses which take the breath away. I've also seen loans where I've told the borrower it was their own fault. That said, I will concede that Ms. Warren is probably woefully ignorant about how your business works. I doubt is she has ever prosecuted a predatory lending claim herself. That does not change my personal conclusion that YSPs are typically a bad thing because of the way they are used. I will stand by that conclusion because of what I have seen in my practice. But I will agree that brokers should not bear all of the criticism on the issue.

[Teddy]

Coming from a quasi-socialist country where high-yield loans were cracked down by a "land-mark" supreme court ruling, I think the fights that go on here are, well, at least constructive.
Does the State do a good job at protecting the intellectually weak or those that stand to get ripped off by the "financially literate" or those who have an "informational advantage"? These are political issues, in a sense, and were answered quite in the positive in Japan.
The above reform has caused a mini credit crunch for those who needed to borrow, but of course the state knows better...