Financial Services 101

According to the US Constitution, Financial Services should be part of the Private Sector.  Insurance, investment, banking and lending are not included in the “enumerated powers” allowed to the federal government.  However, the US government now conducts operations in all of these and regulates them to death. 

Insurance

The best insurance is self-insurance. You may need term life insurance during your early years if only one spouse can work, but if either spouse could support the family, you could invest the money you would have paid in life insurance premiums. This is particularly true if your net worth is big enough to use as retirement income.

Insurance is not a lottery; it is a cash-flow mechanism and is in fact a LOAN or a GIFT, depending on what it costs and what you collect in benefits.  It’s a communal slush fund you don’t really own. You may have rights to apply for benefits, but it may be a hassle. I always viewed my medical insurance premiums as contributions to medical research. If they knew what they were doing, they wouldn’t call it “practicing”. 

Now that medical expenses are at record highs, it is wise to set up a medical savings account and buy “catastrophic” insurance if it is priced reasonably. Obamacare must be repealed to give the medical industry a chance to cost-reduce and re-price itself to actually become affordable and more effective. 

Lending & Banking

Governments have ruined lending and banking with anti-discrimination rules that forced lenders to lend money to everybody.  The end result is that the private lenders exited the markets and now government runs lending through Fannie Mae, Freddy Mac and Sallie Mae. Too many of these borrowers will not be able to repay these loans.

The government needs to repeal anti-discrimination laws and allow the private sector to assume lending functions.

Norb Leahy, Dunwoody GA Tea Party Leader