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The Vanguard Group founder Jack Bogle on government efforts to get financial firms to disclose more client information.
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This is of more regulations.
Treasury considering new rules that would force financial firms to get more information from customers.
Then shared with the IRS the government saying it's a way to fight money laundering.
But is this just another way for DC to clamp down on Wall Street vanguard founder and former CEO Jack Bogle.
What do you think it is jackets like -- -- Out of nowhere here.
Well we all -- always good to be back in the old -- say it's a great idea there is money laundering going on.
There is that tax Dodgers going on out there as we now -- read about in the paper every day.
And the government in in good conscience has to take action.
But I -- -- a little bit in my new book in this section called.
Idea is.
Everything -- or ideas -- a dime a dozen and implementation is everything.
This is a good idea for the country.
Forget let's get everybody out in the open.
But the implementation is everything inside look at this and read the complaints from all these bankers.
They're saying well we've always little clients and so on there is no reason in the world and I can think that we can't limit.
And the disclosure.
To account for the certain side whether mutual fund shareholders are bank depositors well what would besides -- -- feel like a million and -- what would have been.
You know I would say somebody much lower that's a 100000 dollars could be 500000.
Don't know I -- We'll -- -- all the hold those accounts.
Certainly the Iraq you hear from your industry not -- but is that well we -- it will be Jason those clients away.
Because they're gonna feel that they're being scrutinized by the government and -- and a lot of them are doing nothing wrong.
Well -- I don't know who would want to take that step except somebody who was doing something wrong.
I mean why they care at -- the government's involved in our lives -- -- that I that.
We report from the Internal Revenue Service.
He shareholders' capital gains there well how would this be different outlook let -- my next question if the IRS already gets a lot of his information.
It sounds to me like there could be another layer.
You know going through your stuff.
-- I read it and nearly the IRS is not involved in this this is.
The Treasury Department I -- that the iris separately involved -- interior.
You're doing everything cup -- -- the tax man you know also now you have a redundancy in.
Well I mean I I think you know full disclosure has always been the watchword of the mutual fund industry now and I think.
Full disclosure then maybe you should do some other steps I'll admit that -- And maybe -- the subpoena before you know some of the largest but it would only a judge says -- -- -- -- -- you know -- their -- to comply -- this is -- -- -- -- -- it's not cost those shareholders something.
Well mail you know this is a funny industry.
These managers make.
Millions sometimes billions of dollars a year.
That their cost go up 500000 dollars they complain.
-- you know than the cost in this industry is all locked up in very high management -- very high sales charges.
Very -- portfolio turnover across.
In the media I think courses and away the last refuge of the scoundrel.
United they've cut cost -- that tell -- what the cost sorry no no glittering generalities here honoring your position does it.
It's a good one but you know we live today at -- that it would you start argued.
The father this industry and anything about it we now have -- mutual -- that we -- stocks we now -- specialty products and we -- -- sectors of the economy.
And and I'm wondering if there is the price to pay for all of that and it's just too damn much what what do you think.
Well into -- on the mutual -- thing we we have become them.
You know any individual stock -- New York Stock Exchange over the counter market used to be role of speculators played.
Now they're playing in exchange traded funds right it's better for them because they get more diversification.
And but when -- you probably know this -- -- the these fighters the S&P 500.
ETF exchange traded fund.
He's -- widest traded stock in the world that's for a day after day after day turns over its.
-- and snazzy and on the consultancy that scares me in and of itself that scares me Alan mutual fund manager today just a matter your alone.
Can have -- enormous.
Influence and impact on.
The markets and there are a lot of these guys in.
I don't know I don't know what -- where that goes but it troubles me.
Well it has a lot of people have reasonable big differences of opinion about whether individual investors are doing this speculation.
But there's not much question.
And about 75%.
Of this trillion plus dollars and -- -- trillion won or to UPS.
75% of that total cost 750 billion.
Is held by people are trading all the time people -- evening off their positions.
More important long -- investors short investors.
And they offset one another.
And trade back and forth there and the availability loses the data shows -- a group -- -- transaction cost command.
But I don't think strictly healthy but these institutions are grown up.
To make their own decision.
I can drone -- real quickly on that I I was have more time my friend but -- -- be remiss if I didn't get your your -- of the market land going into the fall here we always.
Freak out about another over its fans remember for years ago you know this time year you know the chills it cause.
There's so what are you seeing.
Well -- first of all when he earlier commentators was right we do have to get some clarity as to what the future holds in terms of the government's role.
Taxes.
-- capital gains dividends all that kind of thing.
And I think it's less that we get the right rules that we get some rules but the fact of the matter is that how economy US GDP.
This is the best performer in the developed world by a good margin.
And and the rest the world does not made this kind of recovery China's course much more rapidly growing but seems to be thinking quite a bit.
And yet despite those economic.
Conditions.
Confidence is really a very high level.
You know look at a 1% government bond that's probably the five year note.
We're gonna 3% corporate bond those deals don't commitment mentor that's that's a vote of confidence and look at the stock market -- -- seventeen times earnings.
That's not.
Exuberant that's that's just about -- or be -- suggests a pretty good level of confidence malevolent -- short of speculation.
Interest Jack always good seeing you again my friend you be well.
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