"Any informed borrower is simply less vulnerable to fraud and abuse"
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Greenspan’s line reads like a friendly consumer tip, but it’s really a compressed worldview: markets are mostly fine, people are the problem, and knowledge is the best regulation. “Informed” does heavy lifting here. It turns vulnerability into an individual failing (or at least an individual assignment), implying that the primary defense against predatory lending isn’t stricter rules or stronger enforcement but better-prepared borrowers. The subtext is classic late-20th-century economic faith: information is a kind of armor, and if you’re harmed, you were under-armored.
The phrasing also shifts moral weight. “Fraud and abuse” names real wrongdoing, yet the sentence doesn’t dwell on perpetrators or penalties; it dwells on the borrower’s susceptibility. That’s not accidental. It offers an elegant way to acknowledge that bad actors exist without conceding that the system needs structural constraints. The cure is education, not confrontation.
Context matters: Greenspan’s tenure at the Fed coincided with deregulation, financial innovation, and a swelling credit economy that marketed complexity as convenience. Adjustable rates, teaser terms, and fee-loaded products thrive on asymmetry, not just ignorance. In that environment, “informed borrower” becomes an idealized character who can read fine print like a lawyer, forecast macro conditions like a trader, and negotiate like a banker.
The line works because it’s both true and insufficient. Financial literacy does reduce risk. It just can’t, on its own, neutralize incentives built around obscurity and leverage. Greenspan offers a tidy moral in a messy market: knowledge protects. It also lets institutions off the hook.
The phrasing also shifts moral weight. “Fraud and abuse” names real wrongdoing, yet the sentence doesn’t dwell on perpetrators or penalties; it dwells on the borrower’s susceptibility. That’s not accidental. It offers an elegant way to acknowledge that bad actors exist without conceding that the system needs structural constraints. The cure is education, not confrontation.
Context matters: Greenspan’s tenure at the Fed coincided with deregulation, financial innovation, and a swelling credit economy that marketed complexity as convenience. Adjustable rates, teaser terms, and fee-loaded products thrive on asymmetry, not just ignorance. In that environment, “informed borrower” becomes an idealized character who can read fine print like a lawyer, forecast macro conditions like a trader, and negotiate like a banker.
The line works because it’s both true and insufficient. Financial literacy does reduce risk. It just can’t, on its own, neutralize incentives built around obscurity and leverage. Greenspan offers a tidy moral in a messy market: knowledge protects. It also lets institutions off the hook.
Quote Details
| Topic | Money |
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