This week started with Labor Day and ended with sending the kids go back to school, and, perhaps not coincidentally, the weather turned into complete garbage. Indeed, there are no more excuses. Summer is over. No more humidity, children or vacations to serve as your scapegoats — you must face the music, and so, too, must your children. And as disappointing job numbers came in on Friday, right after the apex of the Democratic National Convention, we must get back to the work of closely examining our relationship toward money. And this week we looked at this issue on big scale — is our banking industry still at risk of collapse? — and on the smallest of scales — how does allowance affect children’s understanding of budgeting?
Our contributors from Banking.com considered what a kinder, gentler banking industry might look like. The industry is, to say the least, not what it was just a few years ago. Bankers need to “behave themselves” now, both on a personal level — when out at the pub, in particular — and when it comes to new regulatory issues. Can they handle it?
The case of Richard Eggers suggests it’s a real challenge. The man, a 68-year-old Vietnam veteran, was fired from his Wells Fargo call center job recently when a background check turned up a 40-year-old crime: cheating a laundromat out of 10 cents. Wells Fargo has blamed strict and poorly-worded federal regulations preventing anyone convicted of fraud from working at a bank. The rules were put in place to keep frauds out of upper management, but a hyper-literal read of the rules has lead to plenty of stories just like Eggers’ — who, by the way, has filed suit against both banks and their sometimes careless regulators.
Speaking of regulators, are they doing too much? or doing too little? For the finance industry, this question is of the utmost importance. From Bloomberg, we learned that too-big-to-fail is over, which is exactly why we should do nothing to make our banks any smaller. It’s a confusing argument, and we did our best to parse it apart. On the other hand, there’s a burgeoning industry in prepaid cards, which is growing at an alarming rate considering the regulatory grey area it occupies. The Pew Charitable Trusts took a long, hard look at the industry and decided that most cards are a bad deal for the majority of consumers because of the regulatory grey area, and because of the costs. For those who are bad at managing their money, however, prepaid cards are a reasonable alternative to checking accounts.
Money management is a tough thing to get down. There’s a good chance you learn how to do it at a young age. Our own Simon Zhen shares how he came to be the savvy and careful saver that he is: he never had an allowance. His money came in windfalls at two times of year: Lunar New Year and his birthday, which, luckily, falls almost exactly six months after the new year. Living red-envelope-to-red-envelope required more planning than the week-to-week existence most children have with their allowance. Does this make most Americans bad at saving and financial planning? Are we trained to live paycheck-to-paycheck?
Perhaps relatedly, more and more Americans are buying cars with astonishingly long-term auto loans. There has been an increase in the number of 73 to 84-month loans taken out in recent months. An auto loan of that length means that Americans are throwing money into a bottomless pit. You’d think people might learn about the perils of negative equity after seeing so many homes underwater — but times are tough, and a lowered monthly payment might makes sense for now even if it doesn’t make sense in the long-run. And speaking of homes, we took a look at the various real estate listing sites that help potential homebuyers get to know the market as well as their realtors do.