Jam a fork in your toaster; you deserve a refund.

The Huffington Post has put up a transcript of Mr. Obama’s recent appearance on The Tonight Show with Jay Leno.  It’s worth a brief perusal, if only to read the now-infamous Special Olympics joke for yourself.  Among the other soundbites was this interesting bit:

Obama:  When you buy a toaster, if it explodes in your face there’s a law that says your toasters need to be safe. But when you get a credit card, or you get a mortgage, there’s no law on the books that says if that explodes in your face financially, somehow you’re going to be protected.

Perhaps I’m misunderstanding the president’s analogy — indeed I hope I am.  The problem with his comparison, I think, is in the location of the fault for the explosion.  While I’m hardly advocating industrial regulations, in the toaster scenario the fault presumably lies with the manufacturer, who, by promising but not delivering to you a properly working product at the time of purchase, has taken advantage of you.  There is perhaps room here for prosecution of the toaster maker for breach of contract.

In Obama’s scenario, however, the “toaster,” or financial contract, has exploded because you stuck a fork in it and jammed about for a few minutes, not because it was poorly made and misrepresented at the sale.  The mortgage or credit card bill explodes in your face when you stop paying it because it is outside your means to do so.  Of course, if the failure is on the side of the bank a breach of contract suit would be in order, and our legal system is amply capable of taking care of that.  But what Obama seems to be suggesting is very different indeed, and would reward poor financial decisions.  (I leave out, of course, the role of the Fed in leading the banks toward foolish lending practices, which might — to extend the analogy — be described as a government regulatory agency encouraging the toaster producer to follow its own unfortunate toaster-making guidelines.)

Hmm….maybe we’ll soon be allowed refunds on toasters we’ve poked a fork into as well?

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