Financial Crisis-My Two Cents

I have been fielding clients concerns over the last two weeks so now it’s time for me to put in my two cents.
Most of you who have been following me for a long time, know that I have been bitching about the problems in the financial industry since day one. I have never been a big fan of government intervention in business affairs. Compliance is costly, onerous, and sometimes, plain unnecessary. But left to our own oversight, we fail miserably. Greed, dishonorable conduct, and unethical behavior is more the norm than ever before and so (as I gasp) it is time the government needs to step in and say, “What a minute! You have to stop this!”
How they intend to control this craziness, I have no idea. The disease has spread and unless the whole nation starts to “get it”, I fear that it will continue- just in a more covert way.
To highlight just a few injustices that I and my clients have experienced over the course of my more than 24 years in the industry:
*After extensive analysis of a real estate transaction, a client goes to sign documents at the escrow company and finds that the loan rate has changed by more than an eighth of a point higher than he was quoted and told he had to close that day or else lose the deal.”
This is a common bait and switch loan transction that was happening all the time.
*Client just bought a large life insurance policy from a broker that was backed by a AAA Excellent A.M. Best rated company. The life insurance company goes bankrupt as AM Best rates them AA Superior.
Life insurance ratings companies are useless
*Fannie Mae and Freddie Mac bondholders were rubber stamped high bond credit quality ratings that were all a sham to promote more sales and more commissions to large bond brokers”
Clients were told they had to use a certain title company to purchase real estate through their broker, But weren’t told that the broker made extra fees by using that title company.
I could go on and on but you get the picture.
And the highest insult to the American people:
The Financial Planning Association and the National Association of Personal Financial Advisors sue the Securities Exchange Commission to force all people who call themselves Financial Advisors to disclose how they are compensated—- and loses.
The CEO of Citigroup is forced out of the company because she wanted the Citigroup hedge fund that fraudulantly lost customer’s funds to repay every penny back to the customers.

Tagged as: Financial crisis, government intervention, investments, unethical behavior