And BTW, Allahpundit is an idiot

But first, some smart ideas on reforming the banking system.

We Need Smaller Banks Now

If conservatives had their act together, they could seize the issue of financial reform and craft a market-friendly solution that addressed the key factors that drove us off the precipice last fall.

Instead we get bilge like this from Allahpundit at Hot Air:

Good news: Responsible credit-card users to “subsidize” deadbeats now

So much idiocy packed into such a short post.

1. Note the tone of moral outrage and angry condescension. This is the "moralization of credit" in action

2. There are none so blind as those who will not see. Allahpundit shows us what ideology-fueled naivete looks like. The starting point for his "argument" is a statement from a paid industry flack. Rightwing bloggers never trust politicians and their PR mouthpieces. When it suits their purposes, however, they will swallow whatever swill the private sector churns out.

3. Points 1 and 2 lead to the most egregious error. Allahpundit gets it wrong about who is subsidizing whom.

For twenty years, credit card borrowers have paid for the free riders who pay off their full balances each month.

I should know, i worked in the industry for 10 years at two very large issuer/banks. We scrutinized customer profitiability from every angle. Those people who paid interest (Allahpundit's "deadbeats") generated the profits. "Responsible credit card users" lost money for the bank.

See also:

Diseconomies of scale