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CONSUMER PROTECTION AGENCY: HELPING CONSUMERS? OR FORCING THEM TO PAY MORE?
TRACY BYRNES: Yeah, well most things do these days. Look, we're talking about more power-hungry bureaucrats needless regulation and compliance and costs that are just going to be passed on to the consumer. So the agency created to help the consumer is going to end up hurting them in the end. Look, ask corporate America. Ask Bank of America. Bank of America recently tried to impose fees on its customers and what do they do? They bark back and the fee's gone. Maybe we should let the capital markets do it themselves.
WAYNE ROGERS: By the way, this is created under Dodd Frank allegedly, reform act. Dodd Frank is two thousand, two hundred pages long. Nobody knew what was in it when they voted on it. The Congress again, a massive moronic statements about it, didn't understand it and now you come out and you appoint a tsar to run this thing. It has no budget. It creates its own budget. It creates its own rules as you rightfully pointed out; twenty one of them so far and they're totally out of control. Every single one of these agencies then proliferates itself and it appoints more and more people and you have massive regulation, some of which are at odds with each other by the way if you read it carefully. So, it's impossible to comply. There is no way the federal government is going to continue to do this. At some point you're going to have to have some kind of a revolution in this country I think. It's just insane with what is going on.
CHRISTIAN DORSEY: Yeah, I think 2007 and 2008 shows us that there is a very clear need for this kind of an agency. Those regulatory functions were spread across so many different government agencies. The fact that we're going to consolidate them to one, first of all is very efficient and secondly this is going to help consumers because it's going to prevent the kinds of abusive practices that led to the incredible consequences of 2007 and 2008. That's the best way to protect consumers is to make sure they don't lose all of their wealth.
JONATHAN HOENIG: Well, that's the theme the president has been spouting since day one, that unregulated financial markets are what killed the economies and that economies and financiers are all nefarious crooks, but as the scroll just demonstrated, Freddie, Fannie, Bernie Madoff, Citigroup, every failed financial institution, Christian you're shaking your head, but was highly regulated coming into 2008. There have been highly regulated for years and as Tracy pointed out, it's the regulation that actually encourages the collapse, makes it harder to detect and really quickly, when the president stands up and says, well now we've got a 1-800 number where you can call and say if you're not getting a fair deal on your mortgage, it makes a mockery of the presidency.
JOHN LAYFIELD: Well you're already seeing that. You're seeing about half of credit lines being taken in because banks don't know what's going to happen. They sell a loan to Freddie or Fannie and all of a sudden they get the loan put back on them. Look, remember the credit crisis, this has zero, absolutely zero to do with the credit crisis of '08. You had the transaction in Germany with aka John Paulson and Goldman Sachs. The problem with that is that you had some person at a credit rating agency rate garbage AAA the same as a treasury bond and it goes bankrupt, starts going bankrupt a month later. This has to do with about 20 million people of payday lenders. This has nothing to do with financial institutions. This only affects the very small group that's taking out loans on a two week basis, which are paid huge interest rates; nothing to do with finances.
FORCING KIDS TO GO TO COLLEGE: GOOD OR BAD FOR JOB MARKET?
CHRISTIAN DORSEY: Well look, it's a nice idea but the execution is horrible. Getting a job in this labor market with a good income doesn't require a college degree necessarily or even a graduate degree. It requires that you study or become skilled in something that's useful in the economy. The days of just having a college education and that making you well suited to any job that was available, those are gone. Right now we have needs for workers who have particular areas of proficiency and expertise and just telling people that they need to go to college and get a degree in anything that they choose is not necessarily the path to future success and furthermore Cheryl, there is always going to be a need for people who have skills and abilities that you don't get in college; whether they be master electricians, or people who have certain technical skills. So this goal or plan to force everybody to go to college is misguided and it won't help the labor market at all.
JOHN LAYFIELD: Those under 24 with a college education have under a 10 percent unemployment. With just high school it's 30 percent. It's three times as high. Look, you can tell people in generational issues you have poverty, you have low income, you have education. I've dealt with this over the last number of years with these exact groups of people. You've got to break the cycle somewhere and that is options. These kids don't know they have options. This is not to force kids to go to college. This forces kids to apply to college. I disagree with that Christian, you're right the idea is good the execution is very poor, but to make these kids take the SAT and ACT, to let them understand what their options are, that is the only way you're going to break generational issues like low income, education and crime.
WAYNE ROGERS: I don't think forcing anyone to do anything ever works. You've got to make it invitational. You've got to make it attractive. I agree with Christian on this. Kids don't necessarily need to go to college to get an education about something. Look, you know Steve Jobs didn't suddenly go to graduate school and get all of this. Are you going to start forcing people to do things? Number one, that's bad. Number two, the need for certain kinds of educational processes is not necessarily generated in college. There's a wonderful book out called Startup Nation about Israel and how Israel gets to what it has done. I advise everybody to read that. It's a good guideline for what we should be doing about education.
TRACY BYRNES: You know what Cheryl? Maybe it's because I have three who are going to eventually be in school at the same time. How are they going to pay for it? First of all you have an application cost too. It's not free to apply to college. You have to pay for that. You have to pay to go to college and you know what? Maybe it's society's fault. Maybe it's our fault that we make the Harvard grads seem to be such a smarter, better, more productive person than the person who has a skill and can actually do something. Last I've heard all the Harvard grads come out as liberals and they're bashing this economy left and right. Maybe the skilled worker is what we need. Maybe we need more of them and maybe we need to make them feel that they're actually adding to society and not hindering it.
JONATHAN HOENIG: Well of course and I think to the panel's point, there's a massive misperception that for some reason a college degree unto itself is a value that everyone needs to pursue. Wayne mentioned Steve Jobs. What about, oh I don't know, Andrew Jackson? President Andrew Jackson didn't go to college; John Rockefeller didn't go to college; Hally Berry didn't go to college. There's plenty of examples, but Wayne hits on the point. Yeah I think she's pretty successful. Wayne makes the moral point here, which is correct, that freedom ends when force begins and the minute that the government or a bureaucratic official says I'm forcing you to go to college, why don't these experts in D.C. check out their own high schools with a 43 percent graduation rate. That's disgusting. Focus on that before you tell people what to do with their lives.
INCENTIVES FOR HOUSE 'FLIPPERS': HELP OR HURT THE HOUSING RECOVERY?
WAYNE ROGERS: Well, I think it's simple. You've got a terrible imbalance in the housing market right now. We still haven't cleaned it up. It exists there by all of the indices that you read that there's a problem with it. Anything that can incentivize people to buy homes I think is a good idea going forward and this is one of those plans that works. Nineteen percent of the people who bought homes last year were flippers and that's not so bad because somebody is taking that home, they are refurnishing that home, rebuilding that home and then putting it back on the marketplace and that's a fair and wonderful thing to do in a free market system.
CHRISTIAN DORSEY: You know flipping has a bad connotation from the early 2000's when we were in a housing bubble and flipping was making prices far exceed a home's value. That's not the case now. We're in the middle of a severe housing crisis and if you can get homes that are sitting in abandoned and blighting communities and actually get them to be attractive to sellers and to buyers, that's a wonderful thing for this economy right now.
JONATHAN HOENIG: Christian cracks me up. He is against speculation unless it's in the assets that he wants to boost up the value that he thinks are too cheap. Well, I'll make the point that in a free market system the profit is the incentive. You don't need, in this case, another government program to get people to act in a manner in which they normally wouldn't do. That's what we need to do; get government out of the business of incentivizing this type of economic inaction and actually let that free market occur.
TRACY BYRNES: We shouldn't be incentivizing anything and at this point, let the flippers flip man and all the power to them. Get in there, get out, clean them up and get them back on the market for regular consumers.
JOHN LAYFIELD: Wayne and Christian are right. If you can sell these homes that's good, but you still have the government in it. Government insures it and then government buys it from Fannie and Freddie, insures it by FHA and Fannie and Freddie have already spent one hundred and fifty one billion dollars. I'm not sure this does anything more than make more government exposure.
WHAT DO I NEED TO KNOW?
TRACY BYRNES: Men filling 2/3 of new jobs great for taxpayers and means they aren't mooching and getting jobless benefits.
JOHN LAYFIELD: States considering online gambling a win for (WYNN).
WAYNE ROGERS: Get high risk with high reward with (SIRI).
JONATHAN HOENIG: Clean-up with big cap value stocks and (DOW).