The bureaucrats who run the Consumer Finance Protection Bureau seem to believe that Americans are infantile nitwits too stupid to be trusted to make even the most basic financial decision without help from the federal government.
That’s the conclusion I came to, at any rate, after reading comments from a couple of CFPB bigwigs over the past week. The first comes from Stacy Canan, deputy assistant director of the CFPB’s Office for Older Americans. Canan’s apparently been lying awake nights lately worrying about alphabet soup of professional designations that’s overtaken the investment advisory business. “There absolutely are some financial advisors that are using the designations just for marketing purposes [Marketing! Egad!] and they don’t really have the substantive expertise and training to back up what that designation implies to investors,” she told NPR in an interview on May 7. “Seniors deserve the right to understand whether they’re entrusting their life savings to someone who’s only had a weekend seminar versus spent months or even years of training to learn how to give adequate financial advice.”
I have no idea whether certain advisory designations are fig leaves or not. But even if some are, I have a solution to Canan’s problem. Seniors can ask. “What does it take to become a Chartered Retirement Planner anyway?,” they might say. Or “What’s does becoming a Certified Investment Advisor involve?,” would be another good one. Now that I think of it, a prospective client might have other questions as well, such as about the planner’s prior experience and educational background. She might also ask for references. Back in the days before the CFPB, this sort of preparation was referred to as “common sense,” and Americans were actually pretty good at using it.
But for Canan, that’s not good enough. Her recommended solution to the scourge of so many advisory designations? That the CFPB get involved in setting up standards for their accreditation. Yes, by all means, let’s get the federal government involved. Because seniors need to be protected from these voracious predators masquerading as investment advisors. Or as Canan puts it: “Seniors in particular often mistakenly believe that their financial advisor is looking out for their best interest. That is rarely true.” [Emphasis added.]
Really? Advisors only rarely look out for their clients’ best interest? One wonders how they’ve managed to stay in business. Canan seems to believe that the investment advisory business is simply systematic, organized thievery. Worse, she seems to think consumers are too stupid to recognize that. But not to worry! She’s from the federal government and is here to help.
I’ve got a better idea. How about we assume that consumers are capable of taking personal responsibility for their decisions, and can be expected to make the right ones? Decisions related to one’s finances are among the most personal an individual can make. It’s outrageous that a government agency, the CFPB, is scheming to get involved in them.
But Canan isn’t the only over-activist bureaucrat at the CFPB. There’s also Rohit Chopra, the agency’s “point person” on student loans. Chopra is the author of a recent CFPB report on how to deal with soaring student loan delinquencies. What do you think his recommendations are? Stiffer underwriting requirements to limit future credit problems, perhaps? Putting schools themselves on the hook for a portion of their delinquent graduates’ debt? Of course not! Instead, Rohit’s recommended fix, according to American Banker ($) , is that “private student lenders [should] offer ‘refi relief’ to borrowers who pay on time; lower monthly payments for distressed borrowers; and an option to clean a defaulted borrower’s credit history once they [sic] begin paying a modified loan on time.”
Translation: let’s give more money away, to current and delinquent borrowers alike, basically without condition. If you were foolish enough to actually save up for your (or your children’s) college, or worked your way through school (you stupid sap, you) to pay for it, you’re simply out of luck. And now that you’re a taxpayer, you get to help pay down the debts of your fellow students who knew enough to game the system. Thanks!
The people who run the CFPB seem to have the basic view that under no circumstances should people have to live with the consequences of their own freely made decisions or bear their own personal responsibility. Instead, the government should always be able to intrude itself in people’s lives to “fix” things. The trouble with allowing the government to insert itself into every part of your life is that, well, the government is going to end up inserting itself into every part of your life. There’s a word for that: tyranny. The CFPB tries to portray itself as a paternalistic entity that’s only trying to help people. In fact, it’s bureaucratic monstrosity, funded directly by the Fed, that is accountable to exactly nobody. The ideas that people at the CFPB come up with sound benign enough now. But as they accumulate (and they will, trust me) they’ll seem arbitrary, intrusive, and ubiquitous-and, of course, expensive.. But by then it will be too late. The time to start objecting to the agency’s intrusiveness is now.
What do you think? Let me know!