Finance’s Phishing and Overcharging

Finance’s Phishing and Overcharging Student’s Name Institutional Affiliation What should be done about Finance's "Phishing" and Overcharging The world is no stranger to financial crises. The last one occurred in 2007-2008, and it reminded people of the need to revamp the financial sector. However, it is apparent that the issues bedeviling the financial sector are more than just financial crises. The markets can help us, but also the tendency to harm us. What sellers are concerned with is making profits at the expense of their customers even if it means taking advantage of them. Therefore, in this essay, I am going to explore ways of dealing with finance’s phishing and overcharging. Overcharging and phishing take place in some ways. The first is through rents. Epstein & Montecino (2016) define rents as those incomes that some institutions or individuals get more than what would be needed to get them to engage in economic activity. If we consider banks, rents refer to the income that they would be able to get above what is needed for them to carry out an economic activity. The second is the “cost of too much finance.” In society, there is a lot of transfer of income to finance. However, this finance has been able to undermine the economic situation of workers and households. Financial institutions have also been able to make excessive profits and the expense of people, and they have been able to achieve this through overcharging. To deal with the issue of finance’s phishing and overcharging, the focus should be turned to the financial system. Epstein & Montecino (2016) propose three approaches that can be used, including financial alternatives, financial reconstruction, and financial regulation. To address financial regulation, there is a need to put in place policies to address costs, especially those that can lead to overcharging. There is also the need to limit the complexity, interdependence, and size financial institutions. Besides, they should be regulations that limit capacity and incentives in the financial sector to short-termism. Regulations will also ensure that there is fiduciary responsibility and conflicts of interest will be eliminated (Epstein & Montecino, 2016). The only way of doing this is ensuring that all financial activities are put under the purview of policies and regulations. This will ensure that the safety net that financial institutions have used to venture into risky activities and charge the costs to the society are elimina...