(Excerpt from MarketLogics 5/5/15)
It is amazing how mortgage banking is so entrepreneurial, compared to the lack of innovation from the other industries that are government-regulated utilities.
Think about airlines. How many think that the airline industry is making too much money today? It was a utility. It became a for-profit business that could not control costs until after a few rounds of industry-wide bankruptcies. Few airlines escaped and remained in business. Where would the airline industry be today had it remained, in essence, a utility?
While we are thinking about utilities, what about the electric, water and gas utilities? Do you think that innovation come from them? Of course not, instead they provide little profit, little innovation, and yet huge systemic risk because they are government sponsored utilities. The power grid is the Achilles’ heel of the United States.
Think about the telephone utility that was a monopoly that no longer exists. In comparison, the voice communication commodity is doing quite well. Why? Because of the profit motive.
Now think CFPB. Is it really consumer protection or is it protection of the new status quo?