One of the boldest reforms in the president's financial regulatory overhaul is the creation of a Consumer Financial Protection Agency.
The CFPA would cover everything from truth-in-lending disclosures to mortgage lending and credit cards. It's a massive portfolio. The goal is to encourage banks to sell "plain vanilla" products as aggressively as they push more exotic -- and profitable -- products.
I asked Austan Goolsbee, one of the president's top economic advisers, about that yesterday.(You'll need Flash installed to watch.)
Comments
Good interview. The big question is this: How do any of us KNOW that the money and stocks in our accounts are really safe? AS in the notion of "safe-safe". Whether a bank holds our dividend reinvestment money or a brokerage house holds our stocks, how DO we actually know (for sure) that what we are getting for statements are correct, accurate and reliable? It seems to me that Congress needs regulations that force the certification of assets held in any account. .... The need for protections is everywhere. We get overcharged by banks handling dividend reinvestment plans. We get overcharged by credit card companies. Mutual funds made up of mutual funds are a secret rip off. Every day there is a person crying on some TV show that "I didn't know. I thought my money was...(fill in the blank)".
We don't know who really handles our trades. We don't know who truly owns and controls our mutual fund(s). When we are informed we get some obscure letter full of jargon.
It once took me 6 months to get my money out of a mutual fund recommended by my university. I thought they were American, too. They operated out of some "boiler room" in New Hampshire and were owned by a Swiss bank! It took the SEC to pry my money loose. This was way back in 2003. I know of colleagues who were shocked to find out their retirement account was with AIG. The name of the "product" they were using did not say much about AIG.
It is more than "buyer beware" these days. Without real oversight and enforcement of new transparency regulations I fail to see how consumers will be protected in the future.