Last week I went off on a rant about irresponsible homeowners and the disturbing trend of so many of them walking away from their contractual commitments.
Some readers took issue with my position, arguing that irresponsible lenders were just as, if not more, at fault.
Point taken. Enough bad decisions were made on all sides to keep the blame wheel perpetually spinning.
But I started again thinking about the horrible way so many folks handle money when I read today's New York Times Sunday magazine piece Buyer, Be Aware.
In the article, David Leonhardt examines the Consumer Financial Protection Bureau which was created as part of the recently enacted financial services bill. There are high hopes that the Bureau will reign in bad financial industry practices and help consumers make better financial decisions.
That it is easier legislated than actually implemented. Or, as Leonhardt writes:
"[T]he central question facing the bureau will be how to distinguish between corporate malfeasance and consumer frailty. It is not an easy task. For as long as there has been money, people have been doing stupid things with it."
The magazine piece examines several ways the Bureau can, possibly, stop people from doing stupid things with their money.
But I hope that those who will actually run the new agency will pay close attention to this point Leonhardt makes:
"The overriding goal of the bureau will be to help people understand their financial choices. More often than not, it will allow banks to continue a given practice — but force them to explain, in clear terms, what it means for consumers. … The ultimate goal is pushing banks to compete in ways that benefit consumers, rather than having them compete over which methods can most cleverly fool consumers."
If we can actually reach that regulatory accommodation, then our individual responsibility will once again matter, not just in defining our personal character, but also in protecting our finances.
Related posts:
- Growing number of irresponsible owners walking away
from home equity loans - Implicit support for continuation of the first-time homebuyer credit?
- Hot new housing trend: Renting
- When renting is the right choice
- Economy killing home tax break, redux
- Did the home sale tax exclusion kill the economy?
- Tax policy and the American homeownership dream
- When not to pay down your mortgage
- Trading credit card debt for a tax bill
- When real life meets tax refund loans
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Donald
That ‘Buyer, Be Aware’ article is something else. My feeling is that both parties played an important role in this mess. People ultimately need to look out for themselves though.
Ken
Yes, Individual responsibilty is important, but in general people have very little knowledge in the personal finance area. According to JumpStart in some state as high as 80% of high school seniors failed a basic financial literacy test. We need to make financial literacy a mandatory requirement in primary and secondary education. Because even in clear language a bank loan or Credit Card Statement isn’t going to provided the full picture of impact on a persons finances over their life time.
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