“The Consumer Financial Protection Act of 2010 (“CFPA”) Contains Dangerous Delays and Provides No Consumer Protection for Investors or Business Using Section 1031″
SAN JOSE, CA July 21, 2010 – Michael Halloran, president and CEO of NES Financial, has attacked the final version of The Consumer Financial Protection Act of 2010 (“CFPA”) for avoiding any substantive consumer protection for thousands of citizens in a critical sector of the U.S. economy.
“The phrase ‘it’s the thought that counts’ may be appropriate for birthdays and anniversaries, but it’s not very effective when it comes to drafting legislation. If the intent of reform is to remove systemic risk and to protect the users of financial products in unregulated sectors of the U.S. economy, then the Congress has missed the boat in trying to protect an industry,” said by Michael Halloran.
In the current financial reform legislation awaiting signature, Congress has produced a poor effort for 1031 regulation. Though the bill includes language applying to exchanges and facilitators, it only pertains to transactions primarily for personal, family, or household purposes. Unfortunately for consumers, 1031 exchanges are available only for business or investment purposes. They have never been available for personal use, making the proposed regulation irrelevant.
“In drafting the legislation, Congress may have done more harm than good by creating a law that is applicable to nothing at all,” continued Halloran. “This is dangerous on two fronts. First, this creates a false sense of security — passage leads people to believe that laws to protect them during 1031 transactions are on the books, which is simply not the case. Secondly, legislators will move onto other items thinking 1031 regulation has been addressed, leaving needed regulation and the industry behind.”
“Another troubling item in the bill is a timeline for transition and study,” continued Halloran. “Congress has included a timeline that would delay enforcement of any regulation for up to four and a half years, leaving the door open for additional theft and fraud. Over the past four years, investors in 40 states have lost over $700 million due to fraud, theft and mismanagement of funds. The public deserves protection now, not protection down the road.”
In the absence of regulation, NES Financial continues to lead the industry by implementing best practices to provide the highest levels of security of funds, transactional transparency and compliance. This focus is resonating with investors and has helped NESF grow to become the largest provider of 1031 solutions in the country.
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