Extreme Vetting, But Not for Banks - Rolling Stone
I know, I know, it's a dying rag, blah, blah, blah.
Just read the article and do some more research.
John
I did exactly as you asked. I read it and came away with this impression... At least 50% of the article is essentially name calling. "This guy worked at a bank that got a bailout." So let's talk about the overheated real estate market that caused financial/foreclosure crisis, and convince me the FEDERAL GOVERNMENT didn't play a role. Here's something that I actually witnessed. Let this be a lesson for how people turn a small pile of money into a larger pile. Pardon me for rambling, but I eventually get to a point.
In 2004, I was dating a 28 y/o girl who knew how to sew. She redid some seats for a C-body I owned. To make it easier for her, about halfway through the project I bought her a used commercial sewing machine for around $800. We both worked out at a gym. The gym owner liked cars and came out to look at my '72 Polara Wagon. I mentioned that my GF re-did the seats. He asked if she could sew gym pads. Before long, she was kept very busy changing his gym(s) over from pukey 90s turquoise vinyl to more modern gray. Then she started doing other gyms. She found a niche that no other upholstery shop wanted to touch.
She outgrew her parent's basement. So I purchased a solid brick ranch home from the 1950s that needed some updates. She used the house to work in, with her sewing equipment and her one, new employee. She paid me a small rent, and I remodeled the home (kitchen, bath, etc.) in my spare time, after work and weekends. I bought the house for $120k and by the time I was done, it sold for $152k. That's not a "flip this house" rate of return, but remember my outside labor costs were almost zero, and most of the materials came from Craigslist.
When I went to the closing, all the paperwork showed a sale price of $162k. I told the title officer "there must be an error". He told me, "no, this is a Federal Government program that is designed to help first-time home buyers. They get an extra $10k in cash to use for their downpayment."
Here's a laugh, the "Ameridream" program still has a zombie website, last updated in 2009 that explains it! You can see the whole program got shitcanned on 10/1/08. They're asking you to "write your congressman and save the DPA!"
So now we have a home that appraised for $152k recording for $162k. Guess what that does for the next appraisal? And now the new owners have very little skin in the game and $10k to spend on flatscreens or some other bullshit that was surely in a landfill 5 years later.
So guess what happened to my little Ameridreamers? Within 2 years they walked away from a solid, remodeled brick ranch, but not before stealing everything inside it. How do I know? The house is in my neighborhood and I talked to the neighbors. Eventually the market had enough of this and all those inflated appraisals cratered, taking with them all the banks that bought into them. Granted, the banks were all too happy to let people mortgage these houses... That is their business after all. But who was pushing for it from the government side? You need look no further than that zombie website...
...an unholy cabal of industry and "special interest" groups.
So please, when I see Charlie Wrangle (D) or Richard Shelby (R) who were both huge supporters of this program (and their ilk) being called out by the media to resign in shame, I'll have more room to concern myself that DJT has chosen bankers as advisors. Just how do you find someone with the knowledge who wasn't involved with the 2008 crisis? Hire a 24-year old out of college?
Now for the second part of your challenge, research... Just what did DJT do today that has the media all worked up? You read mine since I read yours... And mine doesn't go off into the weeds about 9/11, immigration, refugees, etc. or make fun of his hair.
http://www.forbes.com/sites/robertb...ule-heres-what-you-need-to-know/#798a7c165fa3
Donald Trump Thumps Fiduciary Rule: Here's What You Need To Know
http://www.forbes.com/sites/robertb...ule-heres-what-you-need-to-know/#798a7c165fa3
At first blush, the fiduciary rule seems like a common-sense requirement. Those handling our investments should act in our best interests, shouldn't they? Indeed, some may be surprised to learn that their advisor doesn't have to act in their best interest. One would think that the fiduciary rule would be necessary to protect consumers who are not knowledgeable about investing. Upon closer scrutiny, however, the fiduciary rule loses much of its luster. To understand why we need to look at the two significant problems with investment advisors.
Problem #1: Bad Investment Products
The first problem is the tendency of some advisors to steer their clients into expensive, complicated investment vehicles. The vast majority of the time an advisor recommends a variable annuity or non-traded REIT, it's because of the fees they will earn from this product. Most investors have absolutely no need for these types of investments and pay dearly so that the advisor can line his pocket with hefty fees.
It would seem that the fiduciary rule would address this problem. An advisor couldn't be viewed as acting in the best interests of her client if she lined her pocket with fees from selling expensive investments most investors don't need. Well, it turns out that even under the fiduciary rule, an advisor could do just that.
Problem #2: Fee-Only Advisors Are Really Expensive
Many fee-only advisors tout the fact that they are fiduciaries. They look at non-fiduciary advisors as the bottom feeders of Wall Street. They even complain about their high fees, while talking up the low fees they charge.
The problem is that the fees most fee-only advisors charge are astronomical. The industry standard is one percent. While that doesn't seem like much, over a lifetime of investing the seemingly small fee can rob you of hundreds of thousands of dollars.
