Wouldn't it be nice to know that your money is safe?
Palm Springs, Calif.
"Is my money safe?" That's question No. 1 for many Americans today. And it goes to the moral heart of the global financial crisis: lack of trust.
But some of this trust can be restored simply and inexpensively. My idea? What the Food and Drug Administration (FDA) did for food-product labeling must be done for financial institutions. This, more than the over-reactive overregulation that's sure to come, is an important step to restoring the public's trust in financial firms once the dust settles.
Thanks to FDA guidelines, whether we're buying vanilla yogurt or meat lasagna, we can look at the label and know what we're getting. How much fat? How much sugar? How many calories?
These questions are answered before we ever buy. We may choose to ignore them for a Ben & Jerry's binge, but that's our own business. We don't need to be nutritionists to make an informed decision.
When you put your money in a bank, brokerage firm, insurance company, or other financial institution, do you know – between their own internal policies and the regulatory requirements – how much, for example, of your dollar the firm is holding in reserve for available cash and to cover sour debts? Is it 10 cents? 30 cents? If this information were available to you in a simple way when choosing where to put your hard-earned money, wouldn't that be appealing?
As a former senior executive at a brokerage firm with responsibility at the time for $21 billion in assets, I had to sit through frequent meetings to discuss our standing versus the regulatory capital requirements for brokerage firms, and I can tell you we boiled it down to a simple number that everyone in the room – economics expert or not – could understand.
All I'm asking is that something like this be made simple and accessible to potential and actual customers ... to you. I challenge all financial institutions to be the first to do this.