Ben Bernarnke, former chair of the Federal Reserve until early 2014, commands $250,000 per speech. Any Fortune 500 company would consider it a fantastic coup to have him on the board. Firms would line up around the block to pay him 7 or 8 figures to have him represent them.
Ben Bernarnke, arguably one of the best credit risks in America, was unable to refinance his home mortgage. Why? Because just like the TinMan, our finance industry has no brain. Instead the decisions about your financial future are made via highly automated algorithms. Ben recently changed jobs. Bad, bad, bad says the computer. Ben’s income is now variable, perhaps even unpredictable. Bad, bad bad says the computer. No, No, No says the commuter. (New York Times, 10/3/14 p. B1 Why Can’t This Man Refinance?”)
Algorithms are terrific; they automate many important tasks, in theory freeing up humans to take on more important tasks, make better decisions. The danger is that we forget the limits of formulas, we forget to build some flexibility into the process; we take the human completely out of the loop.
As always, I share what I most want/need to learn – Nathan S. Collier