Your Money: Dollars & Sense

Whether it’s the affect of tariffs on prices at the store or news about how a CEO’s reckless activities lead to a sell-off of the company’s stock, we’ve all heard something about something that we know will impact how far our money goes.

You might be asking…

What if I woke up and couldn’t get my money? Is my money safe in the bank? What does the bank do with my money? What if I need more money than usual, will I be able to withdraw all of my savings? What if something does happen to my bank? Will I get my money back? What if my dollar doesn’t go as far?Why is everything getting more expensive? What happened to all of the choices we used to have for products? What if generics were no longer available? What if my retirement savings drop overnight? I just checked the box that my HR manager suggested for the management of my pension. Is my money safe? Who is over- seeing the investment of our pension funds? What if some- thing happens in the markets, will my 401K be safe? What if the person managing my pension takes risks I never agreed to?Is my pension guaranteed no matter what happens to my employer? How do I even know what the person managing my pension is doing? Isn’t my employer managing my pension? Are there any protections in place in case my pension is mismanaged? What if my Social Security check doesn’t arrive on time? Is my social security guaranteed no matter what happens in the economy or the markets? Will I be able to claim my social security the same way that I always have? Why is there always talk about cutting social security when it’s some- thing that we’ve all paid directly into?

What if I get scammed by a bank, credit card company or on a car loan, is there anyone I can report it to?

Since 2010, we’ve been able to easily report unfair practices by financial services companies like banks and lenders directly to the Consumer Financial Protection Bureau (CFPB). The CFPB, created in the wake of the financial crisis, makes it much easier for us to report these things, and the agency has helped consumers recover more than $20 billion in compensation and cancelled debts. But, the current agency head wants to scale back and even potentially eliminate the CFPB.

The agency that investigates financial scams, abusive lending, and unfair banking practices is already operating with fewer resources. The OBBBA would reduce its budget by nearly 50%.

A 2026 restructuring proposal would eliminate more than 50% of the agency’s remaining staff.

I just checked the box that my employer or HR manager suggested for the management of my pension.  Is my money safe?

The Employee Benefit Security Administration (EBSA) oversees the rules governing investment and security of private-sector pension plans. One of the ways it does this is by enforcing the “Fiduciary Rule” which requires the person or organization in charge of investing the money to minimize the risk and report in detail on how the money is invested. Fiduciaries who take unreasonable risks can be held responsible for some of the losses their clients might experience. However, recent changes at EBSA mean both that the Fiduciary Rule might be weakened and that going forward fiduciaries might also invest pension funds in riskier assets like private equity funds and crypto currencies.

The Department of Labor has a proposed a new rule that will both:

  • Make it easier for plan administrators to invest in alternative assets, and,
  • Make it harder to attach liability to plan administrators for losses.

Am I going to be able to get my social security?

With the baby-boom leaving the workforce and beginning to draw on their social security, the number of people withdrawing from the fund is growing faster than the number of people paying into it. While we’ve all been repeatedly assured that benefits will not be cut, there have been staff cuts at the Social Security Administration, efforts to make it harder for people to claim benefits, and a smear campaign against social security recipients by people in the highest levels of government.

The White House has created administrative hurdles that make it harder to apply for and maintain access to benefits.

Many Federal agencies regulate financial practices, financial markets, lending rules, the investment of retirement savings, and the value of our money overall.  These include:

  • The Federal Deposit Insurance Corporation (FDIC). The FDIC was created in 1933, during the Great Depression. What it does is insure depositors of the safety of their bank deposits up to a certain amount, monitor the holdings and investments of thousands of banks, and set safety standards such as the mandatory minimum cash reserves that a bank must have on hand. FDIC insurance currently covers deposits in member banks of up to $250,000. 
  • The Securities and Exchange Commission (SEC). The SEC maintains confidence in the stock market by requiring publicly traded companies to be transparent and honest about their operations and that stock brokers to be transparent and honest with people to whom they sell securities. The SEC sets the rules and timing for the disclosures that public companies must make, and investigates investor complaints about potential fraud, misinformation or other violations of the law that public companies may have committed.
  • The Employee Benefit Security Administration (EBSA). EBSA, housed inside the Department of Labor, is the primary federal watchdog overseeing the security of the $14 trillion that Americans have in private-sector pension plans. Much of that money is invested in the public markets and in government issued securities. In addition to the SEC, whose role is to protect investors by requiring transparency, EBSA protects investors and pension funds governed by ERISA by enforcing the “Fiduciary Rule”, which sets the standard of care for pension-fund administrators and prevents them from making risky investments.
  • The Pension Benefit Guarantee Corporation. The Pension Benefit Guaranty Corporation, similarly to the FDIC, guarantees pensioners a certain portion of their pension even if a private company’s pension fund fails either through mismanagement, or because the company itself is no longer in business.
  • The Consumer Financial Protection Bureau (CFPB). CFPB was created in the aftermath of the 2008 financial crisis to, among other things, prevent unfair or deceptive practices put in place by sophisticated banks to over-charge (or over-risk) less sophisticated consumers.  
  • The Social Security Administration (SSA). The SSA oversees Social Security, the social insurance program that pays benefits to retired, injured and disabled Americans. Social Security is funded by the social security tax that almost all tax-payers pay with the expectation that their investment in the program will be paid back as “social security benefits” after they retire. 
  • The Department of Justice (DOJ), Antitrust Division. The Antitrust Division of the DOJ enforces two laws, The Clayton Act and the Sherman Act. These Antitrust regulations prevent companies from forming monopolies, taking control of entire industries, being able to control prices without competition, and/or colluding with other companies in the same space to set high prices.

These agencies, laws and rules are facing cuts in many ways.  Agencies are losing funds and staff members. Officials may pick and choose which rules to enforce and against whom. And many of the rules governing financial practices are being questioned and revised.

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