This isn’t the first time America has seen an influx of financial regulations as a result of a period of financial distress. The stock market crash of 1929 and the Great Depression that ensued thereafter gave birth to the Glass-Steagall Act of 1933, the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 and the Investment Advisers Act of 1940. I won’t go into the purpose of each of these (we’ve linked to each of the law’s Wiki entries if you’re interested) but suffice it to say, they were designed to protect people–and our economy in general–from profiteers who placed more value on short term personal gain than the overall strength and stability of our economy as a whole.
These profiteers will always be out there and they will always be looking for a way to make a killing, regardless of who gets hurt. And there will always be regulators trying to keep them in check. Sometimes the regulators will have the upper hand, and sometimes the profiteers will. Right now it appears that the momentum is with the regulators, which is certainly nice, but it won’t last. It is my fervent hope that they take advantage of this opening, not just by trying to close some loopholes, but by crafting an actual policy to help Americans understand where the hell all their money is going. It may take the better part of a generation to effect this change but we might as well start now because things aren’t getting any better.
We’ll be looking for real leadership on this from Elizabeth Warren and the rest of the Jedis over at the CFPB as the government’s other financial literacy initiatives seem sorely lacking in our estimation. I’ve been perusing FLEC’s National Strategy for 2011, and let’s just say that it’s underwhelming. It’s really a collection of goals, without an actual strategy for making them happen.
Here’s an idea we’ve been tossing around at Credit.com. Include financial literacy questions in the math component of the SAT. We’ll be writing more about this particular plan in the coming weeks but I guarantee, if you make a kid figure out the amortization schedule of a $250.00 debt, assuming minimum payments on a 24.99% APR credit card, then you’ve got yourself one savvy credit card shopper… who might be able to teach mom and dad a thing or two.