Now that the Borrower’s Protection Act, S. 1299, would require mortgage brokers and originators to establish and adhere to a fiduciary standard when helping consumers secure a home loan, shouldn’t Congress pass a law that says all financial professionals must abide by fiduciary standards when dealing with consumers–like investment advisors do?
Joseph Borg, president of the North American Securities Administrators Association (NASAA) and director of the Alabama Securities Commission, posed that question to freshman Senator Robert Casey (D-PA), who serves on the Banking, Housing, and Urban Affairs Committee and the Special Committee on Aging, during NASAA’s annual public policy conference May 8. Casey replied that he would indeed be interested in pushing this idea to members of the banking committee, and requested a sit-down with members of NASAA to discuss the issue further. Casey agreed that a “more universal [fiduciary] standard” should be applied to all of the players in the financial services industry.
Casey said lack of financial education among consumers is the main issue plaguing many of the financial problems we see today. The Borrower’s Protection Act, introduced on May 3, seeks to curb the recent problems in the subprime lending market by “giving consumers more opportunities to learn about mortgages,” Casey said, and “gives more meaning” to the Truth in Lending Act.
When it comes to the elderly, Casey said Congress is now beginning to craft legislation that would levy stiffer penalties on financial professionals who dupe seniors. He also said that as a newly elected Senator, he “will oppose efforts to take power away from state regulators.” The “worst thing that DC could do,” he said, “is stifle the innovation of state regulators.”