Ignoring the fact that the artificial rate manipulation by the Federal Reserve simply sends the wrong signals to the market, it is hard to even begin to comprehend the absurdity of the message of the article. Are we really supposed to believe that those people that have handled credit poorly in the past should somehow be qualified for lower rates today? Did we not learn anything from the housing bust: too much credit granted to those unwilling to pay creates problems. How can higher rates be considered a problem? Unfathomable. Higher rates are the market's response to higher credit risk. Sometimes I wonder why I even bother to read the WSJ when such absurdity is printed.
Yes, higher rates man reduced demand from loans, but we must learn and understand as a nation that it is producers, not consumers that lead economic growth (see here) and piling on additional debt in a nation awash with debt is not a sustainable way forward (see post from last week).
Outstanding consumer credit outstanding per the U.S. Federal reserve has remained relatively consistent since 2007 between $2.4 and $2.5 trillion.
Adding additional debt on top of $2.5 trillion in consumer debt is not going to help anyone in the long term, especially not consumers. The federal government with no power to generate revenue except via theft (again, see last week) is even worse shape with $15.8 trillion in debt as of 6/21.
So instead of the Fed talking about bridging the "debt divide" perhaps as a nation we should confront the debt mess in which we find ourselves. People that have handled debt irresponsibly need to face the consequences (as do the lenders who lent the money). Consequences to actions will create change. Allowing banks to fail will create the necessary market incentives for the remaining banks to make sure they are more responsible. Of course this brings up the idea of fractional reserve banking which is a topic for another day.
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