Credit Is Easy for Wall Street but Stays Tight on Main Street - Barrons.com

PROCESS VS. PRODUCT: Credit Is Easy for Wall Street but Stays Tight on Main Street - Barrons.com: "- Sent using Google Toolbar"

Some of this reminds me of the logical outcome of the "process vs. product" arguments that were logically debated in college lectures years ago.

As 'process' wins out (very big in Europe with ISO), one sees that critical judgment is replaced by appropriate judgment. Thus, with more and more regulations of banks replacing critical decision-making, it was easy for banks to load up on AAA-rated subprime debt.

After all, the process said how to use AAA.

Now, we're pushing for even more of the same. Regulations don't ensure good judgment. With fear paramount due to government expanding more and more, is it any wonder that the increasingly government protective turf of banking is buying off on the 'process' prescribed by government?

As Randy notes, the obvious outcome is for banks to do what is 'process-safe'. In other words, just buy sovereign debt (and maybe less of that from Greece, Portugal, etc.)