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Posts Tagged ‘The Consumer Educational Foundation’

No Place for Sy Syms on Wall Street

Posted by Larry Doyle on June 30th, 2009 12:09 PM |

Sy Syms, a retail maven in the New York market, is known far and wide for coining the slogan, “An Educated Consumer Is Our Best Customer.” Well, that may have worked for Sy in retail but there would be no place for Sy on Wall Street. Why?

An educated customer, whether institutional or retail, is able to more fully understand products, risk, and pricing. In the process, profit margins get squeezed. The Wall Street Journal highlights this point in reporting Plain-Vanilla Financing Could Melt Bank Profits:

The Obama administration’s plan to protect consumers from bad deals on mortgages, credit cards and other financial products is an attempt to take the industry back in time and could put a dent in bank profits.

The plain-vanilla guidelines are part of an ambitious effort by the Obama administration to force banks to offer mortgages and credit cards with simpler standard terms.

“That was a market that used to be pretty strongly anchored on plain-vanilla products,” said Michael Barr, the Treasury Department’s assistant secretary for financial institutions.

The coming guidelines, part of a broader proposed overhaul of the financial-services sector, are likely to start with mortgages and eventually cover credit cards, car loans, payday loans and bank-overdraft programs.

A plain-vanilla credit card, for example, isn’t likely to have a lower introductory “teaser” rate. Card issuers wouldn’t be allowed to “change the rules of the game” on consumers, as in cases where a 0% rate is applied to only part of their balances.

The complex loans of recent years didn’t just confuse consumers. The bankers themselves ultimately misjudged whether customers would repay them. And the resulting credit crunch has forced lenders to drop many of their most risky products.

Fairly self-explanatory why Wall Street has little interest in going down that path. In fact, rest assured that the Wall Street lobbying machine is hard at work right now to water down the Consumer Financial Literacy Program.

If there is no seat for Sy Syms on Wall Street, rest assured they’d roll out the red carpet for George Hull and David Hannum . Who are George and David, you ask? They perpetrated a hoax, known as the The Cardiff Giant, back in the mid 1800s.  This hoax led to the coining of a phrase commonly associated with P.T. Barnum, and openly embraced on Wall Street, that is “there’s a sucker born every minute.”

For those interested in this piece of history: P.T. Barnum Never Did Say, “There’s a Sucker Born Every Minute.”

For those interested in increasing financial literacy while navigating the economic landscape, keep reading Sense on Cents.


Updated News 1:30pm 6-30-09
Obama Unveils Consumer Protection Agency Legislation

How Wall Street Bought Washington

Posted by Larry Doyle on March 9th, 2009 3:35 PM |

A great American and loyal reader (thanks FL) shared a report recently produced by not-for-profits Essential Information and The Consumer Education Foundation.  This report, Sold Out: How Wall Street and Washington Betrayed America, has gotten little to no attention in the general media. What a shame.  I find of particular interest the fact that a number of the currently discussed regulatory changes are directly addressing the points highlighted in this report. I personally view these proposed regulatory changes as substantiating this report and adding credibility to its effort. For the naysayers in the audience, I would ask you to review the report and reconsider your assessment.

I was struck a month ago by the incriminating statements put forth by Senator Chuck Hagel and CIA head Leon Panetta, which I highlighted on February 16th in Legalized Bribery. Those statements bluntly indict our massive system of lobbying, political fundraising, and the quality of those running for elected office! In light of that article, I am more and more convinced that our elected officials have turned their offices into massive for profit machines at the expense of our public well being.

I commend the authors of this report, Roger Weissman and James Donahue, for taking the time and making the extensive effort to expose the truth. The full report, 231 pages in length, spares no detail. In studying it, I found the information and analysis riveting. Let me try to summarize it for you. (more…)

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