If it ain’t broke, break it?
Now comes our Congress, eager to feed the public’s lust for punishing the banks for having done our economy so much damage, and ready to impose a new bunch of regulations on that industry so as to protect the consumer from…. From what?
Here’s what the public really needs protection from:
1. Its own ignorance. This is certainly number one! Had the public been at all intelligent or educated about borrowing, they would have known better than to expect either the government or the lenders to protect them against borrowing beyond their means for homes they couldn’t afford. The first issue is financial literacy, which is sadly lacking in our society, our schools—and especially our Congress to begin with!
2. The Congress. This is the gang that a) tried to buy still more votes by forcing the banks to relax their credit standards and lend money to those poor folks who couldn’t afford to own homes but didn’t know enough to realize it—or, worse, lied about their ability to do so, b) repealed the Glass-Steagal Act of 1933, now allowing the scoundrels who operate the securities industry—the gamblers and financial cowboys—to finally get their hands on the deposits hard-working Americans entrusted to the banks, to fund those doomed loans; and c) had the shameless temerity to appear on public television and blame and pillory the bankers for doing the very things they forced them to do. Lawd, save us from Congress!
3. The Securities Industry. This is the bunch who, since they first started the US stock market in 1792, have conned the American public into thinking they deserved as much respect and veneration as the banks. They were, and are in fact, nothing more than another level of casino operators who have consistently lined their own pockets by offering the hope of something for nothing to the public they relentlessly dupe under the guise of “investing.” It’s they who, over the years, have come up with all kinds of innovative products to peddle that are nothing more than an extension of that notion. And now they’ve been allowed to put at risk the deposits from the banks they now own! This is the industry that, until the 1930s, manipulated the market so they could make money on its ups and downs from an unsuspecting public. These are the institutions that were caught red-handed by New York’s Attorney General, Eliot Spitzer, benefiting from gross conflicts of interest in dealing with their clients—to the tune of $1.4 billion in fines for the top ten security firms—at the turn of this century. Spitzer even sent packing in disgrace the venerated head of the respected New York Stock Exchange, Richard Grasso.
Until these clowns came along, banks could do very well, managing their risk, holding funds in reserve for their mistakes, and lending only to those they judged to be capable of meeting their commitment.
They say, “if it ain’t broke, don’t fix it.” And now we’re being asked to vote for folks that broke it so they could take credit for fixing it? C’mon!
Hi Ellis,
It’s good to hear from you again on your blog.
You’re quite correct when you say the public is uneducated in matters of finance.
Just look at the level of television shows offered on any given night and I’m utterly shocked as to what the United States public views as entertainment!
I’m limited to PBS, Science, NatGeo, and the History Channel for programming these days.
And lately the History Channel has been showing reality programming like Pawn Stars and Pickers.
I confess to watching Pawn Stars after my insurance agent encouraged me.
The odd part about both Pawn Stars and Pickers is that they make a good living off taking advantage of people whom are down on their luck (Pawn Stars) or elderly (Pickers).
It first infuriates me that the people themselves have let themselves get into this position in the first place, but Pawn Stars says they charge 10% interest per month for 3 months.
You get $100 loan and in 3 months you owe $130 or you lose the item. In essence, that’s 33% interest retroactively.
Pickers is worse… Taking advantage of elderly people whom are clueless about the true value of their items.
This is what America calls entertainment! Taking advantage of others. Getting something for nothing. We can see where that has led our country.
A friend recently commented that he was offended by a comment that the government was spending money like a drunken sailor. He said having formerly been a drunken sailor on many occasions, when he ran out of money, he had to quit spending!
My brother and I have recently completed some estate planning to help keep the government’s hands off already taxed assets and the attorney, whom seemed competent at estate planning viz a viz JK Lasser’s New Rules for Estate Planning, ended the process with a 30 minute discussion on his investing services.
1.6% a year to day trade stocks and bonds. He was sure he could beat the Vanguard S&P 500 index fund.
He’s a well respected attorney and has many clients for whom he manages assets. Entry into his services starts in the mid six figures and is considered an honor even to be considered.
I see no way he can do this after taxes and his fee.
My shock is that he does this for many other people. The successful are even ignorant on financial matters.
It all boils down to people expect to get something for nothing. And it occurs at all levels of intelligence. Let someone else pay for it.
Warren Buffet had an editorial in the New York paper I believe in which he saw three solutions to our debt. 1. borrow from the citizens, 2. borrow from foreign nations, or have rampant inflation erode the value of the dollars we owe.
Of the three, he said rampant inflation was the politically correct way to solve our debt. Pay back what we owe with dollars that are worth a lot less.
It’s going to be an interesting future.