Financial Reform Bill
President Obama signs financial reform bill… Out of this massive 2,400 page document comes only a handful of new rules that might positively impact consumers and the investing public. Pam Krueger spoke with NPR’s Mindy Todd to discuss several consumer-friendly changes to the financial system. The two biggest changes include:
- The creation of a new consumer watchdog agency called the Consumer Financial Protection Bureau. It’s purpose is to make sure all consumers have access to financial products and services and that banks and financial services companies play by the rules of the game.
- Tens of millions of everyday Americans rely on brokers or financial advisors for trusted advice and from now on, anyone who dispenses financial advice for a living must act in their client’s best interest versus just selling an investment that might be suitable. The new rules force brokers to follow the same fiduciary standards as investment advisers.
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Opportunities abound if you look for the silver lining in real estate
No, the housing market isn’t likely to bounce back to it’s highs of 2006-2007 anytime soon. Zillow’s chief economist is saying the residential housing market will likely hit bottom around October 1st and Fannie Mae’s economic forecast is the same. Foreclosures are still alarmingly high and won’t start to normalize until 2011. Credit is still wicked tight (as they say on Cape Cod) and a mortgage loan approval will now take months instead of hours, assuming that is, you have the 20-percent down payment required. I think we can also appreciate that this economic recovery is fragile. So there are plenty of reasons to see the glass as half empty because it is. But I like to look for the silver lining whenever possible and in the case of residential real estate, I see some bright spots. First off, in my lifetime, I have never experienced mortgage interest rates at these low levels – under 5%. . In fact, most of us have never experienced such vast buying opportunities in our lifetimes. I have never seen as many houses on the market looking for buyers. It truly is a “shopportunity” for those who are financially well-positioned to become homeowners for the very first time so millions of people who were edged out of the housing market during the boom can finally afford to own. Investors can grab some smokin’ deals as long as they are willing to be patient and wait a few years for sellers to return. On MoneyTrack this season, we met three really very creative and upbeat people who for completely different reasons, decided that when it comes to real estate, the glass is truly half full! Each of them came from a different part of the country and each was determined to stop agonizing and complaining about what they could not do in this economy and instead, have taken matters into their own hands and daring to put their cash to work in one of the nation’s worst housing markets. Check out this story and keep this thought in mind: when life gives you lemons – just add vodka! Cheers!
Elder Fraud Alert!
Who is watching out for your parent’s money?
Pam Krueger appears on ABC Good Money to advise growing parents about issues affecting their aging parents.
Not so fast for the financial reform bill that was just finalized last Friday.
The bill’s been a work-in-progress for months and then last Friday congressional negotiators finally came to an agreement.The House passed it and the Senate was expected to sign so it as of last week, it was looking like the 2,319 page reform bill was on it’s way to passage before Independence day. But… the death of Sen.Byrd of West Virginia this week has created doubt that this Dodd-Frank version of overhaul will pass before mid July or even get the Senate vote at all.
The President believes the bill will pass the Senate but the Dems lost a key supporter when we lost Sen. Byrd. Byrd’s death left the Democrats one vote shy of the 60 needed to defeat a GOP filibuster of a bill reauthorizing extended unemployment benefits, (according to the Huffington Post).
I’m conflicted about whether this is good news or bad news for individual investors because I would like to believe in the fantasy that we could start all over again – that the sharpest minds in finance can weigh in and help create a much more simple bill but one that deals with so much of what has been left out of the Dodd-Frank bill. I’m talking about leverage – I’m talking about too big too fail, Fannie and Freddie and measures that will really prevent another similar crisis. Does this legislation truly get to the root of the financial system’s problems, or are the very same politicians who helped create the problems in the first place missing the true diagnosis of what caused the problems in the first place?
Can I just point out one little thing that really bothers me? This statement comes straight from the Chairman of the Senate Banking Committee and co-author of the bill. Sen. Christopher Dodd (D-CT), (From the Washington Post):
“No one will know until this is actually in place how it works. But we believe we’ve done something that has been needed for a long time. It took a crisis to bring us to the point where we could actually get this job done.”
Okay. Call me crazy but that’s not what I want to hear after 50+ hours of public debate. Look, no question that the lack of enforcement of existing regulations and the lack of the effective rules has put our financial system at risk with the loss of $17 trillion dollars of household wealth and 8 million jobs wiped out. And I want the system fixed! But Sen. Dodd’s comments make me wish I could just blink like Jeannie used to do on her I dream of Jeannie show when she wanted a “do-over.” Can’t we just get to something that would receive bipartisan support? And the final draft might be more like 50 pages? I realize it’s a dream because this piece of work already had more than 70 republican and bipartisan amendments and the whole thing argued publicly for over several months. The Declaration of Independence was written on one page because I think they ran out of ink. Guess that answers my question.
