Consumer Protection Priority for New Agency
As the month of July drew to a close, Friday saw Wall Street mulling over concerns about the disappointingly slow US economic growth rate, resulting in a day spent in negative territory and a virtually flat finish to the week. The Dow Jones Industrial Average closed at 10,465.94, being an increase of 0.4 percent for the week, while the S&P500 dropped 0.09 percent to 1,101.60 for the week, but gained 6.9 percent for the month of July. The Nasdaq Composite ended the week at 2,254.70, representing a drop of 0.4 percent. Responding negatively to GDP data, the market dropped 2.3 percent on Friday, but recovered to an extent later in the day. Investors found themselves faced with a mixed bag of information for decision making, with the US economic growth slowing to an annual rate of 2.4 percent and the economy expanding to a lesser extent in the second quarter of 2010, compared to the first quarter. But on the positive side, the Chicago PMI gauge of business activity and the consumer sentiment index compiled by the University of Michigan were both marginally better than expected, providing a sliver of a silver lining in the cloud of uncertainty.
It appears that the establishment of the new consumer protection agency may to some extent be acting as a stimulus to consumer activity. There has been mixed response to speculation that Harvard professor Elizabeth Warren will be appointed to head the fledgling Consumer Financial Bureau, but it appears that support for this move is growing. It was reportedly Professor Warren’s idea, way back in 2007, to set up a consumer protection agency in the first place, and having served in a position of oversight in the US banking bailout strategy, as well as being a consumer advocate and bankruptcy expert, she certainly fits the bill for this position. The other serious contender for this post is Michael Barr, currently Treasury Department Assistant Secretary. Both of these candidates are serious about bringing about solid, workable changes to the way financial institutions and loan agencies interact with consumers, with consumer welfare being of paramount importance – which makes a whole lot of sense when considering that consumer spending is believed to account for up to 70 percent of US economic activity and is crucial to economic recovery.