CNBC Kudlow & Cramer - Transcript
CNBC News Transcripts
SHOW: Kudlow & Cramer (5:00 PM ET) - CNBC
HEADLINE: Senator Susan Collins of Maine discusses a Senate hearing on the mutual fund industry
ANCHORS: LARRY KUDLOW; JIM CRAMER
BODY:
LARRY KUDLOW, co-host:
Better disclosure of mutual fund fees and expenses was the focus of the Senate Governmental Affairs hearing today in Washington, DC. Joining us now to discuss the issue is Senator Susan Collins, Republican senator from Maine. Welcome back, Senator. So let me get it right, simple disclosure and well-placed disclosure of expenses and fees would actually help consuming investors. Is that basically what you're trying to do?
Senator SUSAN COLLINS (Republican, Maine): That's exactly my goal. What we find is a lot of small investors, including myself, tend to focus on the recent rate of return and don't take a hard look at the fees charged by mutual funds. Yet, in the long run, the fees determine the rate of return, net of fees. So it's important that we improve the disclosure. I'd like to see a dollar disclosure of the amount of fees put on quarterly account statements, just as we get our monthly checking account statement.
JIM CRAMER, co-host:
All right. Senator Collins, I guess Eliot Spitzer was down there, different party from yours, but do you think he's making some headway? Is he trying to clean things up or do you think like some of your colleagues down there that it's none of his business and he ought to just go back to talking about New York environmental law?
Sen. COLLINS: I give him credit for focusing attention on a lot of issues that needed to be exposed. He deserves credit for acting on some market abuses when other regulators were really asleep at the switch in some ways.
KUDLOW: Very diplomatic, Senator Collins.
CRAMER: Yeah, that was pretty good.
KUDLOW: I appreciate that election year diplomacy. Perhaps the State Department next. Anyway, is the fund industry giving you any, you know, difficulty, hard time about this better disclosure issue?
Sen. COLLINS: They tend to be resistant to the idea. I think they're concerned about additional costs. But if you look at other financial services that we use, there's a much clearer disclosure of what it is that we're paying for the service. And I think that the mutual fund industry ought to embrace this idea. That way, we'd see much more cost competition among the funds. But right now, it's really hard for an investor to tell exactly what the costs are.
CRAMER: All right. Well, Senator Collins, I'll tell you, I'm personally a little baffled. Maybe you can help me. The Investment Company Institute comes on our show. You've got these horrible scandals. You've got late trading. You've got market timing. You've got hedge fund managers commingle with mutual fund managers. You've got hedge fund managers betting against their own mutual funds. And they tell us the real issue is, no, soft dollars is the issue. Is ICI a little out of touch?
KUDLOW: Against independent venders, let me ask...
CRAMER: Yeah.
KUDLOW: ...let me add?
Sen. COLLINS: I hope the industry will take a more constructive approach, and there are some leaders in the industry that have-we did discuss soft dollars. I think that's another example of hidden costs, because they're not factored into the expense ratio.
CRAMER: Break them out, disclose them and then we'll do it.
Sen. COLLINS: Exactly.
CRAMER: And by the way, Senator Collins-Putnam, which has been in my doghouse, cut fees today; out of the doghouse.
KUDLOW: Yeah.
Sen. COLLINS: Interesting.
CRAMER: Yes.
KUDLOW: But just to reassure free market types like myself, Ms. Collins, you're not advocating any kind of governmental price controls or fee and expense controls?
Sen. COLLINS: I'm not at all.
CRAMER: And that's...
Sen. COLLINS: I don't think the federal government ought to be setting the fees.
KUDLOW: All right.
CRAMER: And on that note, Senator Collins, thank you so much.
KUDLOW: Great stuff.
CRAMER: That's it for tonight's show.
KUDLOW: Thank you.
Sen. COLLINS: Thank you.