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Tom Au, CFA
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In the early 1990s, during the middle of a secular bull market, I began work on "A Modern Approach To Graham and Dodd Investing," that was not particularly suited for the decade of the 1990s, but was ideally suited for the following "Lost Decade" of the 2000s. In the early... More
My company:
Carryl Capital Management
My book:
A Modern Approach to Graham and Dodd Investing
  • Bring On the Consumer Financial Protection Agency 0 comments
    Jul 7, 2009 7:35 PM

    In theory,  a consumer financial protection agency might be a waste of money. That's what the banks are arguing.

    In practice, such an agency is probably what we need. That's because the banks are taking the consumers to the cleaners.

    Banks will send you "free" checks, towards "services" that will cost you a ton of money and are almost impossible to discontinue. Banks will flood your mailbox with expensive "pre-approved" credit cards, that  could subject you to identiy theft if not disposed of properly. Banks are looking to push housing on you that you can't afford, so they can package and resell your loan. I'd rather deal with "squeegee men" myself.

    My mother wanted me to stay out of banking. (So I became an analyst/portfolio manager instead.) She thought that bankers were "no good." I did not believe her earlier in my career. I do now.

    Nowadays, I see banks as good for only one thing; places to "store" money. I would not take out loans (having paid off all my mortgages), I wouldn't buy insurance, and I would think twice before using a credit card (as opposed to e.g. travellers' checkes.)

    Many have suffered much worse than me. They are slapped with fees for minor offenses, they are charged for small balances, interest rates on their mortgages, and worse, credit cards, often seem to ratchet without rhyme or reason, in only one direction, up. People get the worst of things because they don't know enough to read the fine print. There are so many ways for the average customer to be "taken" that we need an agency of the government as a watchdog, and someone to complain to.

    Consumer protection does cost money. It isn't necessary in an "ideal" world. But the world is far from ideal, courtesy of the banks.

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