The Republicans want to get rid of the Dodd-Frank Bill and The CFPB (Consumer Financial Protection Bureau) because they feel the excess regulations are actually hurting consumers. The Democrats want to keep both because they feel the regulations protect the consumer. Here is a direct quote from President Obama on Saturday, “As long as I’m president, I’m going to keep doing whatever I can to protect consumers, and our entire economy from the kind of irresponsibility that led to the Great Recession in the first place,” the president said in his weekly address.
I can see both sides of the argument. Some of the regulations set up by the Dodd-Frank Bill and The CFPB have been helpful to the consumer. Some have downright hurt the consumer. Whenever you have a bill with over 2000 pages and 398 new regulations you will please some people and upset others.
But as I read the President’s comments this morning it got me thinking. His direct quote was , “I’m going to keep doing whatever I can to protect consumers.” If that’s the case then why did Fannie Mae and Freddie Mac up their guarantee fees last month? Lets say you are buying a $400,000 home, putting down 20%, have 800 credit scores, and getting a 30 year fixed rate mortgage. That means, more than likely, the mortgage will be sold to Fannie or Freddie. The old guarantee fee with Fannie and Freddie meant the consumer would have to pay $1000 extra to get the mortgage. That’s crazy enough but now Fannie and Freddie have doubled that fee. It’s now $2000 or roughly .125% higher in rate. What? Fannie Mae made $1.9 billion in the 1st quarter of 2015 and they are increasing their fees?
Fannie and Freddie are regulated by The Federal Housing Finance Agency (FHRA) which was created before The Dodd-Frank Bill and The CFBP were implemented. President Obama may not even know that Fannie and Freddie increased their fees and more than likely he doesn’t know all the ins and outs of the new 398 new regulations. But the comment just grabbed me and made me ask the following questions:
Are the Dodd-Frank Bill, The CFPB, The Federal Housing Agency, and all the other government agencies here to protect the consumer? Where do you draw the line between too much regulation and not enough regulation? How does raising Fannie’s guarantee fees protect the consumer?