EDITORIAL: Loan rates

If you doubt that the progressive worldview involves the establishment of an immense and paternalistic regulatory regime with the goal of choking private-sector initiative, consider a story in Wednesday’s Wall Street Journal.

The piece details the result when Amazon.com tried to partner with Wells Fargo to offer interest rate discounts on private student loans available to members of the retailer’s “Prime Student” service.

In short, the usual hyper-liberal suspects in Congress — including Sen. Elizabeth Warren, D-Havana — made it clear that they viewed such an arrangement with disdain, leading the companies to abandon the plan.

The Obama administration has essentially nationalized the student loan industry by offering artificially low interest rates to borrowers. As a result, the federal government accounts for more than 90 percent of all such loans.

But the Washington subsidies don’t always cover the full cost of tuition, room and board. Some students turn to banks for additional help. Because these private institutions operate in the real world and can’t print money to protect their balance sheets, they charge higher interest rates for these transactions than does the government.

This is too much to bear for some Senate Democrats.

The office of Sen. Sherrod Brown, Democrat from Ohio, “questioned marketing of the rate discount, expressing concerns about whether it disclosed that the underlying rate may be higher than the cost of loans under federal programs,” the Journal reported.

In other words, the loan recipients — college students, keep in mind — need to be swaddled in a blanket of progressive enlightenment to protect them from the predatory tendencies of private financiers.

Absent any evidence of fraud inherent in the Amazon-Wells Fargo promotion, there should be no role for the government here. In fact, such a program, were it to attract consumer interest, might have resulted in more competition in the limited marketplace for private student loans, perhaps even driving down interest rates on such products.

But in the utopia envisioned by Sen. Warren and her acolytes, there’s scant room for consensual economic transactions that occur outside the purview of the federal leviathan. Their distrust of any profit-making enterprise runs deep but ignores the fact that simply confiscating the wealth of the evil 1 percent wouldn’t raise nearly enough to pay for all their free stuff.