Spinning Jenny

The LA Times interviewed the Secretary of the Treasury, a Mr. Paulson: "These are not normal times".

Henry Paulson: The key is to get the balance right and not go so far that you cut off credit and make the situation worse. The Fed has also been looking at disclosure. I think when you look at the mortgage area, it's almost a caricature of what you see in other areas. You've got pages and pages of disclosure, which doesn't mean you're getting the people good information that they can understand. It's sort of, "Everybody cover their rear end," protect themselves legally. But, I've made the case several times, with all the disclosure there should be one simple page signed by the lender and the borrower that says, "Your monthly payment is x and it could be as high as y in a couple of years." The Fed I know has done some real consumer research on this.

Did the Fed do any research as to what happens when the consumer can't even afford the initial x? Or was that not part of the "real consumer research"?

I'm no lawyer but in that situation I don't think it's called "Disclosure". It's referred to as an "Adverse Action Notice".

Of course, that does run into the "cut off credit" part.

Back to the drawing board, Mr. Secretary!