THERE ARE SEVERAL MARGINS ALONG WHICH TO OPTIMIZE.

The Jarrett regency wants to follow up on taxing creditworthy people more heavily to finance Fannie's and Freddie's operations by imposing a ceiling on credit card late fees.

I'd credit Reason contributor Veronique de Rugy with a Friday short take for "Good behavior must be encouraged with appropriate incentives," but, in the spirit of "eat your spinach," even the keenest readers among you will benefit by a modicum of repetition.

The ability to levy appropriately stiff late fees is an important part of the overall consumer credit system. Placing arbitrary limits on such fees might prove popular with consumers today but will also leave these same consumers worse off tomorrow. Companies use heavy fees to discourage late payments. While the actual fee provides some amount of income, its chief function is to lower and offset the risks of lending. Companies would prefer that payments arrive on time rather than having to collect late fees.

Proper risk management doesn't just benefit financial institutions. Individuals considered risky are still able to access credit because of contractual terms like late fees. Lighten the fees and delayed payments will increase, making lending money riskier for institutions. When that happens, the only tools left to manage risk will be higher interest rates—which means higher costs even for responsible borrowers—or outright denials of low-income credit card applicants.

Those other margins of discretion are also available to mortgage lenders, and Professor de Rugy's closing remark, "Preventing or severely limiting the ability of financial institutions to assess appropriate late fees will hurt consumers who can least afford it," applies with equal validity to mortgage applicants with less-than-spectacular credit.  No doubt, though, the sophomores who have control of White House social media accounts will claim to have "lowered borrowing costs."