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According to Congress.org, President Barack Obama will renew a push for new financial regulation this week. At the center of the plan is the creation of a Consumer Financial Protection Agency that would regulate things like mortgages and credit cards. Opponents in the financial industry say the agency would stifle innovation, while supporters say it's necessary in the wake of last year's financial meltdown. Banks and other financial institutions say they are already being regulated by state and federal agencies. They object to fee increases that would fund the new agency. Supporters say the new agency would be similar to the Consumer Product Safety Commission. Instead of regulating household goods such as coffee makers, however, it would oversee the terms of mortgages and problems with credit cards. They say the agency could help prevent problems similar to last year's mortgage meltdown. What do you think? I have always supported ideas which promote a free market economy. But what happens in a completely free market, where moral values have slipped, and people are only looking out for themselves? And I am not talking solely about business leaders. With Bankruptcy at an all time high, even before the economic meltdown, and consumer spending exceeding consumer savings (meaning people are spending more than they make) it seems that much of the public never learned anything about financial planning or fiscal integrity! Was it ok for the federal government to enact new laws to protect us from foreign threats? Why not to protect us from ourselves, or from large predatory lenders? But how far should "protection" be taken? Can banks not learn that when they lend money to people with little financial restraint, and charge over 20% interest, there is a high probability that they will not get paid back? Can borrowers not learn that times will not always be good, and put a little money away for a rainy day? In fact are we not seeing that a majority of US citizens have started to learn this lesson? In March and April the federal government reported that consumer debt has dropped at record levels (see the Time Magazine article). My opinion... Leave the financial sector alone Washington. Let banks fail if they make bad loans, let consumers fail if they borrow irresponsibly. I think that people are starting to learn. Lets all teach our kids how to budget, save money, and invest wisely over time to meet specific goals.
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