Is the government going to impose a "hidden tax" on your retirement savings?
The big lie …
Most people recognize the Consumer Financial Protection Bureau as a consequence of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Named for two of the most corrupt politicians in Congress, this is the mega-agency built on a big lie. That government bureaucrats could prevent or mitigate systemic damage to our economy by regulating “too big to fail” financial institutions and other associated entities whose operations can adversely impact the United States economy. Of course, we can plainly see that those “too big to fail” financial institutions have grown bigger and more powerful – with many of their executives serving temporary roles in government leadership positions.
So how warped is the CFPB? Let us examine some of the details surrounding the agency …
One, the CFPB is now a mega-agency having aggregated enforcement powers from other major government agencies – including the Federal Reserve which is not a government agency.
“Transfer of Functions to the Bureau: Establishes enforcement powers and provides for the transfer of functions and personnel relating to consumer financial protection from the Federal Reserve, OCC, OTC, FDIC, NCUA, HUD, and FTC to the Bureau.”
Two, the CFPB is politically correct. Essentially mirroring the words of Barney Frank when he described the Government Sponsored Entities, Fannie Mae and Freddie Mac, to be more than financial institutions, but instruments of public policy.
“Other Offices Established: Establishes within the Bureau an Office of Fair Lending and Equal Opportunity, Office of Financial Literacy, Office of Financial Protection for Older Americans, and Office of Service Member Affairs.”
Three, the CFPB is exempt from Congressional oversight through the budgeting process as they obtain the majority of their funding from a non-government entity, the Federal Reserve, an organization with little operational transparency.
“Funding: The CFPB will also be funded by the Federal Reserve in an amount not to exceed a percentage of the Fed’s earnings, and up to $200 million in appropriations from 2010-2014.”
Four, the CFPB is an extension of the President’s Executive Power. Unfortunately, the legislators refused to implement a “commission” style entity with leadership consisting of members from both political parties. It should be noted that the CFPB is the organization brainchild of now Massachusetts Senator Elizabeth “Tonto” Warren, a person who lied about her Indian heritage and used fake credentials to wend her way to power. Fortunately, her name was withdrawn by Barack Obama as being unable to be confirmed by the Senate on at least three occasions. The leadership was illegally assumed by Obama’s “recess appointment” of Richard Cordray while the Senate was technically in session. Cordray is still awaiting Senate confirmation.
Leadership: The CFPB is headed by a Director appointed by the President and confirmed by the Senate for a five year term.
Five, as demonstrated by their combination of the federal truth-in-lending (TILA) and the Good Faith Estimate (GFE), they are an example of industry-government corruption at the highest level; believing that disclosure of egregious policies serves the public better than the prohibition of such policies. Yes, the fine print in lending contract is in English – but most often the language contains loopholes, adverse terms and conditions that cannot be understood by attorneys, conveys the advantage to the lender, and is offered on a “unilateral” take it or leave it basis.
So why am I concerned?
As reported by Bloomberg News …
Retirement Savings Accounts Draw U.S. Consumer Bureau Attention
The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency’s first foray into consumer investments.
“That’s one of the things we’ve been exploring and are interested in in terms of whether and what authority we have,”bureau director Richard Cordray said in an interview. He didn’t provide additional details.
The bureau’s core concern is that many Americans, notably those from the retiring Baby Boom generation, may fall prey to financial scams, according to three people briefed on the CFPB’s deliberations who asked not to be named because the matter is still under discussion.
The retirement savings business in the U.S. is dominated by a group of companies that handle record-keeping and management of investments in tax-advantaged vehicles like 401(k) plans and individual retirement accounts. The group includes Fidelity Investments, JPMorgan Chase & Co., Charles Schwab Corp. and T. Rowe Price Group Inc. Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to the Investment Company Institute, an industry association; about $3.5 trillion of that was in 401(k) plans.
The Securities and Exchange Commission and the Department of Labor are the main regulators of U.S. retirement savings vehicles and funds. However, the consumer bureau -- established by the 2010 Dodd-Frank Act -- sees itself as a potential catalyst for promoting a coherent policy across the government, the people said.
Read more at: Retirement Savings Accounts Draw U.S. Consumer Bureau Attention - Bloomberg
The hidden tax?
As a technologist and a futurist, I have little trouble seeing a hidden tax on the horizon. A replication of the FDIC model of insuring financial institutions and one that calls for a institution-paid premium based on the retirement assets held by an financial institution over and above FDIC (Federal Deposit Insurance Corporation), NCUA (National Credit Union Administration), and SIPC (Securities Investor Protection Corporation) protections. Of course, the premium will be passed along to the account holder in the form of reduced yields and increased fees. How the resultant fund would be managed cannot be foreseen, but you can bet it will be to the advantage of the financial institutions and their government enablers.
Worst case …
The worst case would be for the government to simply confiscate the funds and provide a form of “high yielding” paper to the asset owners, which can be redeemed when and if necessary. Of course, since the time horizon on such needs vary, the government would be, in essence, using the Social Security Lockbox model which is nothing more than a mythical IOU sitting in some computer’s silicon memory bank. Of course, this would be unacceptable to the financial institutions unless they were allowed to continue their charade of investments being driven on the financial affairs of companies, the news, the sentiments of investors – instead of on the whims of hedge-fund traders manipulating the market.
Bottom line …
Unless we manage to get honest representatives to lead our nation in reforming our currently corrupt system, we are doomed to accept whatever crumbs they parcel out or devolve into a full-scale revolt against tyranny.
Since I believe that the democrats have been heavily infiltrated by socialists and communists, I suggest that a starting point would be to remove democrats and their fellow travelers from positions of power and to slowly rebuild our government based on those who do not hate America and who are loyal to our Constitution and the liberties it confirms.
-- steve
“Nullius in verba”-- take nobody's word for it!
"Acta non verba" -- actions not words
“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw
“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”
“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS "The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius “A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell “Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar “Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS