Last week President Obama signed (sealed) the Wall Street Reform and Consumer Protection Act (HR 4173) and delivered it into law. This bill is focused on tightening regulations across the financial industry in an effort to avoid a repeat of the recent economic crisis. This legislation establishes government oversight in an attempt avoid future “Too Big to Fail” bailouts. A council of regulators will be charged with constraining and even dismantling troubled companies and will reduce the possibility that taxpayers will be responsible for the burden of bailing out financial firms that threaten the economy.
While there are many components of this law, below are a few of the changes that are relevant to the financial services industry:
Improving Protection
· The Securities and Exchange Commission (SEC) has begun tightening requirements on investment advisory firms to protect investment clients from unwittingly becoming victims of fraud or Ponzi schemes. Financial advisors are now required to disclose all fees, any disciplinary actions and potential conflicts of interest (e.g., commissions). Additionally, the SEC has the authority to impose a fiduciary duty on those who give investment advice.
Opes fundamental belief is that it’s important to be an informed consumer of financial advice. Since our firm’s inception our investment advisors have worked on our clients’ behalf, not for transaction-based commissions. We disclose our fees and make sure that our prescribed strategies are clearly understood and support our clients’ goals. We issue clear and concise monthly statements, a quarterly economic outlook, and quarterly performance and asset allocation summaries. Our investment managers are all Chartered Financial Analysts® (CFA®) or Certified Financial Planners™ (CFP®), which means they are well educated in the details of financial planning and analysis and are held to a fiduciary standard of care and diligence that exceeds industry norms.
While we already operate under the newly requested standards, there are other firms that may dramatically change the way they run their businesses. We applaud the SEC’s expanding involvement.
Mortgage Updates
· Under the new rules, mortgage lenders must verify a borrower’s credit history, income, and employment status. This is an immaterial change for Opes, as we have always followed this process.
Other changes include eliminating pre-payment penalties for homeowners with Adjustable Rate Mortgages (ARM) and prohibiting loan officers from earning bonuses based on the type of loan they sell. Opes believes that borrowers are best served by securing financing for a home in a way that is most effective in taking care of other long term financial concerns - retirement, children’s education and care for aging parents.
$1 billion has been allocated to Emergency Mortgage Relief to provide bridge loans to qualified unemployed homeowners to help cover mortgage payments until they are reemployed.
The goals of this bill are honorable: to promote the financial stability of the United States by improving accountability and transparency in the financial system, to protect American taxpayers by ending bailouts and to protect consumers from abusive financial services practices.
You can read a summary of the 2,200 page bill as included on the United States Senate Committee on Banking, Housing, & Urban Affairs website.
No comments:
Post a Comment