Banking and finance roundup

  • “State-run retirement plans are the wrong way to protect the poor” [Andrew G. Biggs, AEI]
  • Fifth Circuit panel: Federal Housing Finance Agency (FHFA) “is unconstitutionally structured and violates the separation of powers” [Jonathan Adler] Unconstitutional structure afflicts Consumer Finance Protection Bureau too [Ilya Shapiro on Cato amicus brief in Fifth Circuit case of CFPB v. All American Check Cashing, earlier here, etc.]
  • Study: financial advisers in Canada who are not subject to fiduciary duty have personal investments similar to their clients [Peter Van Doren]
  • Regulation can have a lulling effect. Might it even breed financial illiteracy? [Diego Zuluaga, Cato]
  • “As I predicted, the ratchet effect is going to save Dodd-Frank. Sigh.” [Bainbridge]
  • “SEC proposes to limit whistleblower awards” [Francine McKenna, MarketWatch]

One Comment

  • I am not a licensed financial professional, but I have made my way in the stock market for more than five decades. Along the way, I have had friends ask my advice and I have always told them about what I invested in. I have offered no guarantee beyond “If you lose money, you’ll have the sour satisfaction of knowing I lost money too.”

    About five years ago, a friend’s company announced they would no longer be managing her retirement fund, handed her a check and informed her that because of federal regulations, she was barred from managing it herself (she works for a bank). She asked me to sit in on a meeting with a salesman with a well-respected management company. I walked out halfway through. Afterwards, she asked what I thought. “They are going to spend billions of dollars to get you a mediocre result and stick a third of it in a money-market account, reducing your gains even further, and then for the privilege charge you 2%. You’d be better off sticking it in an Exchange-traded Fund like those that model the Dividend Aristocrats, or even the S&P 500 for a couple of decades…. those charge less than a tenth of a percent a year. This ‘industry’ is a rigged game meant to make money for the industry, not you.”

    “I know,” she said, “But I don’t have any choice in the matter.”