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News & Politics News & Politics

Are you ready for Uncle Sam to manage your 401K

Posted by on Feb. 3, 2013 at 8:27 PM
  • 20 Replies

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.

Enlarge imageConsumer Financial Protection Bureau director Richard Cordray

Consumer Financial Protection Bureau director Richard Cordray

Consumer Financial Protection Bureau director Richard Cordray

Andrew Harrer/Bloomberg

Consumer Financial Protection Bureau director Richard Cordray said, “You know if you lose your home because the rest of your block is foreclosed on, your credit history is affected.”

Consumer Financial Protection Bureau director Richard Cordray said, “You know if you lose your home because the rest of your block is foreclosed on, your credit history is affected.” Photographer: Andrew Harrer/Bloomberg

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. (JPM), Charles Schwab Corp. (SCHW) and T. Rowe Price Group Inc. (TROW) Americans held $19.4 trillion in retirement assets as of Sept. 30, 2012, according to theInvestment 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.

Rollover ‘Moment’

With large numbers of Americans heading toward retirement in the coming decade, the CFPB has referred internally to this concept as “the rollover moment,” the people said.

Mark Calabria, director of financial regulation studies at the Cato Institute, a research group that promotes free markets, said that while Dodd-Frank didn’t specifically give the consumer bureau jurisdiction over investments, it could step in if the other agencies don’t.

“I could imagine the CFPB growing into a role on investment savings if it seems like the SEC is asleep at the wheel,” Calabria said in an interview.

The bureau could claim jurisdiction through its Office for Older Americans, which was established by Dodd-Frank with a mandate to improve financial literacy. It is run by Hubert H. Humphrey III, the former attorney general of Minnesota.

The retirement savings industry generally has little to do with the CFPB because the SEC is the main investment regulator, said Ianthe Zabel, an ICI spokeswoman. She declined further comment on the CFPB plans.

Credit Products

The agency officially began work in July 2011 and has focused much of its attention so far on consumer credit products, including credit cards and mortgages. In coming months, the agency is expected to turn their focus to short-term credit products including prepaid debit cards, bank overdraft fees and payday lending.

Longer-term, in addition to focusing on retirement savings, the bureau is studying mobile payments and the plight of Americans whose credit was damaged during the financial crisis, a group officials refer to as “the new subprime.”

“It may be because of things they did and it may just be because they suffered,” Cordray said in the interview. “You know if you lose your home because the rest of your block is foreclosed on, your credit history is affected.”

To contact the reporter on this story: Carter Dougherty in Washington at cdougherty6@bloomberg.net

To contact the editor responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net

by on Feb. 3, 2013 at 8:27 PM
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Replies (1-10):
29again
by Gold Member on Feb. 3, 2013 at 8:36 PM
4 moms liked this

As far as I can tell, Cordray should not even have this job, and whatever he or this council have stated or declared or regulated should be considered null and void!  His was an unconstitutional appointment.  Not to mention he is an a$$ anyway. 

DSamuels
by Gold Member on Feb. 3, 2013 at 8:37 PM
6 moms liked this
Oh a big HELL NO
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broncfan
by Silver Member on Feb. 3, 2013 at 8:44 PM
3 moms liked this

well, somebody on this board warned me about a month ago that this was coming and here it is.  I am wondering what the talking points in favor of this could possibly be.

DSamuels
by Gold Member on Feb. 3, 2013 at 9:00 PM
1 mom liked this
Oh Pelosi and company have been planning this for a while. I found articles going back to Jan. 2010.




Quoting broncfan:

well, somebody on this board warned me about a month ago that this was coming and here it is.  I am wondering what the talking points in favor of this could possibly be.

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broncfan
by Silver Member on Feb. 3, 2013 at 9:03 PM
1 mom liked this

Hubby said it will be allowed because so many people do not have a 401 or any other instrument of retirement funds, therefore a very small percentage of the population will care and another part will go along with whatever BO wants.  URGGGGGG..........................

finnbar
by on Feb. 3, 2013 at 9:09 PM
3 moms liked this
I believe the government will ultimately seize all private retirement assets and use the appropriated monies to create a national retirement system. I am liquidating my IRA now. Would rather take the penalty and be able to use whats left to pay off debt than lose the whole thing.
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toomanypoodles
by Poodles on Feb. 4, 2013 at 6:16 AM
2 moms liked this

 

Quoting finnbar:

I believe the government will ultimately seize all private retirement assets and use the appropriated monies to create a national retirement system. I am liquidating my IRA now. Would rather take the penalty and be able to use whats left to pay off debt than lose the whole thing.

 We just did that too.  WE spent our money on US before it could be taken FROM us. 

We're going to buy gold.

pvtjokerus
by Gold Member on Feb. 4, 2013 at 6:24 AM
2 moms liked this

I got rid of most of my IRA's when Obama came in office and I bought land and gold.  I could see the gov borrowing from  the 401K monies for their debt problems just like they recently "borrowed" from the Federal retirement funds for those that work in the gov.

4kidz916
by Gold Member on Feb. 4, 2013 at 8:06 AM
2 moms liked this

I really need to check into liquidating my IRA.  It isn't alot of money but it is mine, and I want to keep it.

Quoting finnbar:

I believe the government will ultimately seize all private retirement assets and use the appropriated monies to create a national retirement system. I am liquidating my IRA now. Would rather take the penalty and be able to use whats left to pay off debt than lose the whole thing.


gsprofval
by Gold Member on Feb. 4, 2013 at 9:53 AM
2 moms liked this

It's another way for bho and the democracks to steal the money I have earned; even my bank knew about this.

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