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“Because They’re Actually Not”: Why Republicans Struggle To Convince Ordinary Americans The GOP Is On Their Side

Attention, Republicans: if you want to know why Americans never seem to believe you when you say you have ordinary people’s interests at heart, look no further than the new regulation governing investment advisers the Obama administration has now released.

I realize that few readers will lean forward with excitement upon reading the words “fiduciary standard,” but this is actually an important topic, both substantively and politically, so stay with me. The new regulation, which had been in the works for some time, says that investment advisers are required to follow a fiduciary standard, which means nothing more than that they have to be guided by what’s in their client’s best interests, just like a doctor or lawyer must.

You might ask, who on earth could possibly object to that? Other than the investment advising industry, of course. The answer is…the Republican Party.

Not the whole party, actually. Most Republicans would rather not discuss this issue at all, because doing so puts them in an uncomfortable place. But I have yet to find a single elected Republican who comes down on the side of the fiduciary standard.

To explain briefly: As things exist today, when you hire a financial adviser, they’re under no obligation to actually give you advice that’s in your best interests. What they often do instead is sell you products from which they’ll obtain bigger commissions, pushing you into investments that make them more money but won’t necessarily be good for you. The new regulation changes that, imposing the fiduciary standard on those advisers. This is a very big deal, because we’re talking about an industry that manages trillions of dollars in Americans’ money.

This morning I spoke to University of Chicago professor Harold Pollack, co-author (with Helaine Olen) of The Index Card: Why Personal Finance Doesn’t Have to be Complicated and a longtime advocate of the fiduciary standard. He was, unsurprisingly, enormously pleased by the administration’s move.

“People are unaware of the many conflicts of interest that exist in the financial advice industry and how much money it costs them over the course of their lives,” Pollack said, noting that selling clients products they don’t need is a core part of the industry’s business model.

But Pollack is quick to note that financial advisers provide an essential service, since most of us don’t have the expertise to make good investments and save properly for retirement or our children’s education. It’s also an extremely intimate relationship — Americans are notoriously secretive about their finances, which means you’ll share details of your life with your financial advisor that you wouldn’t tell friends or even some family members. That’s why it’s essential that the relationship is based on a core of trust.

“When people are dealing with financial advisers,” Pollack says, “they need to know that what they are getting is actual advice and not a sales pitch.” He also pointed out: “The research that has come out about the poor performance of actively managed investments has had a huge impact.” More and more people are becoming aware that the best investment strategy is often to simply park most of your money in a low-fee index fund; no matter how smart your adviser is, you aren’t going to beat the market.

So what are the political implications of this new rule? On the surface, you’d think that a position in opposition to the administration’s move would be almost impossible to defend. Who’s going to argue that your financial adviser ought to be able to push you into buying something you don’t need? That’s just a couple of steps away from outright fraud.

But if you listen to Republicans, it becomes clear they don’t like the rule, but not for any specific reason relating to the rule itself. They’ll talk about Washington bureaucrats and Obama overreach, but the tell is in their repeated use of the phrase “Obamacare for financial planning!” (here’s an example from Paul Ryan). Whenever Republicans say something is “Obamacare for X,” it’s a way of saying, “We don’t like this thing, but we don’t want to say exactly why, so we’ll just say it’s like that other thing we don’t like.”

This gets to the heart of the different perspective the two parties bring to questions of the economy and government’s role in regulating it. The conservative perspective is essentially laissez-faire: if financial advisers take advantage of their clients, well, that may be regrettable, but we don’t want the government to actually do anything to prevent it, because we have to let the market do what it will. And when it comes to the affirmative policy changes they want to make, for ordinary people most of it involves waiting for things to trickle down. Let us cut taxes on the wealthy and reduce regulations on corporations, they say, and that will create the conditions that will foster economic growth, so that at some time in the future it will be easier for you to find a good-paying job (those getting the tax cuts and regulatory breaks, on the other hand, get their benefits right away).

Liberals, in contrast, are comfortable with making policies like the fiduciary rule — or increases in the minimum wage, or paid family leave, or more inclusive overtime rules — that are designed to deliver immediate benefit to ordinary people. And as complicated as economic policy can sometimes get, most voters can understand this fundamental difference. That’s why Republicans constantly have to struggle to explain why they actually have ordinary people’s interests at heart, and why Democrats can just say, “Yep, there go the Republicans again, just trying to help the rich and screw the little guy,” and voters nod their heads in recognition. Republicans may think it’s unfair, but when they oppose things like the fiduciary rule or try to shut down the Consumer Financial Protection Bureau (protecting consumers, egad!), what do they expect voters to conclude?

Both Hillary Clinton and Bernie Sanders came out in favor of the fiduciary rule last fall; it remains to be seen whether they’ll bring it up again on the campaign trail. But as Pollack notes, the change might not have been possible without the attention it has already gotten. Though people in positions of power often say, “good policy is good politics” as a way of claiming that they have only the purest of (non-political) intentions for their decisions, sometimes exactly the opposite is true.

“This is an example where good politics is actually critical to good policy,” Pollack says, “because if this had been decided quietly in Congress, there’s a good possibility it would have been weakened.” The more attention it got, the more room the administration had to do the right thing. And now that they have, Democrats should keep talking about it.

 

By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, April 7, 2016

April 11, 2016 Posted by | Fiduciary Standard, Financial Industry, Republicans | , , , , , , | 1 Comment

“A Standard Of Absolute Purity”: His Respected Friend; But What Does Bernie Really Think Of Hillary?

What does Bernie Sanders really think of Hillary Clinton?

When they meet in debate, the Senator from Vermont usually refers to the former Secretary of State as his “friend” – not in the polite Congressional-speech sense of someone that he actually despises, but in what is presumably his authentic, Brooklyn-born candor. He speaks frequently of his “great respect” for Clinton. And he has said more than once that “on her worst day” she would be a far better president than any of the potential Republican candidates “on their best day.”

Even more often, however, Sanders suggests that Clinton has sold out to the financial industry for campaign contributions, or for donations to her SuperPAC, or perhaps for those big speaking fees she has pocketed since leaving the State Department. Certainly he has fostered that impression among his supporters, who excoriate Clinton in the most uninhibited and sometimes obscene terms on social media.

But if Sanders believes that Hillary Clinton is “bought by Wall Street” — as his legions so shrilly insist — then how can he say, “in all sincerity,” that she is his respected friend?

To date, his criticism of Clinton on this point is inferential, not specific. He hasn’t identified any particular vote or action that proves her alleged subservience to the financial titans she once represented as the junior senator from New York. As Sanders knows, Clinton’s actual record on such issues as the Dodd-Frank financial regulation bill and the Consumer Financial Protection Bureau ran opposite to the banksters.

Back in 2007, eight years before she could ever imagine facing the socialist senator in debate, she spoke up against the special “carried interest” tax breaks enjoyed by hedge-fund managers. Her proposals to regulate banks more strictly have won praise not only from New York Times columnist and Nobel economist Paul Krugman, but from Senator Elizabeth Warren (D-MA), the populist Pasionaria, as well.

Still, to Sanders the mere act of accepting money from the financial industry, or any corporate interest, is a marker of compromise or worse. Why do the banks spend millions on lobbying, he thunders, unless they get something in return? The answer is that they want access – and often donate even to politicians who don’t fulfill all their wishes. They invariably donate to anyone they believe will win.

Meanwhile, Sanders doesn’t apply his stringent integrity test to contributions from unions, a category of donation he accepts despite labor’s pursuit of special-interest legislation– and despite the troubling fact that the leadership of the labor movement filed an amicus brief on behalf of Citizens United, which expanded their freedom to offer big donations to politicians. (That case was rooted, not incidentally, in yet another effort by right-wing billionaires to destroy Hillary Clinton.)

By his own standard, Sanders shouldn’t take union money because the AFL-CIO opposed campaign finance reform, which he vociferously supports. Or maybe we shouldn’t believe that he truly supports campaign finance reform, because he has accepted so much money from unions.

Such assumptions would be wholly ridiculous, of course – just as ridiculous as assuming that Clinton’s acceptance of money from banking or labor interests, both of which have made substantial donations to her campaign, proves her advocacy of reform is insincere.

Political history is more complex than campaign melodrama. If critics arraign Clinton for the decision by her husband’s administration to kill regulation of derivatives trading, it is worth recalling that she was responsible for the appointment of the only official who opposed that fateful mistake. She had nothing to do with deregulation — but as First Lady, she strongly advocated on behalf of Brooksley Born, a close friend of hers named by her husband to chair the Commodity Futures Trading Commission. One of the few heroes of the financial crisis, Born presciently warned about the dangers of unregulated derivatives.

So it is fine to criticize Clinton’s big speaking fees from banks and other special interests, which create a troubling appearance that she should have anticipated. It is fine to complain that politicians are too dependent on big-money donors. And it is fine to push her hard on the issues that define the Sanders campaign, which has done a great service by highlighting the political and economic domination of the billionaire elite.

But it is wrong to accuse Clinton of “pay for play” when the available evidence doesn’t support that accusation. And if Sanders wants to hold her to a standard of absolute purity, he should apply that same measure to himself.

 

By: Joe Conason, Editor in Chief, Editor’s Blog, The National Memo, February 13, 2016

February 15, 2016 Posted by | Bernie Sanders, Financial Industry, Hillary Clinton, Wall Street | , , , , , , , , | 2 Comments

“Kings Of Comity”: Dear John McCain, Ted Cruz Isn’t What’s Wrong With The Senate, You Are

The Senate runs, as the wise old men who make up the majority of that institution would tell you, on comity. Recently, Sen. Ted Cruz, who has been in the Senate for about 10 minutes, has been accused of disrespecting the Senate’s tradition of comity. He has been accused of “engaging in innuendo” by repeatedly insinuating that Chuck Hagel is somehow in the pocket of evil foreign powers, and he is also said to have engaged in the even worse crime of talking too much even though he’s just a freshman.

Here’s Politico with the shocking details:

Behind closed doors, some Republican senators report that Cruz, in his stone-cold serious prosecutorial style, speaks at length when it’s far more common for freshmen to wait before asserting themselves — particularly ones who were just sworn in.

Absolutely appalling, how he insists on acting as self-impressed as his more senior colleagues. Politico also reports that Cruz was rude to Chuck Schumer on a Sunday show, which just isn’t done. After Cruz’s hostile questioning of Hagel, McCain publicly rebuked the Texas senator, something McCain only does to practically everyone who annoys him in any fashion. “All I can say is that the appropriate way to treat Senator Hagel is to be as tough as you want to be, but don’t be disrespectful or malign his character,” Mr. McCain told the New York Times.

Yes, Ted Cruz has obviously not yet learned that the Senate runs on comity. Except the problem is the Senate isn’t running at all, and hasn’t been for some time now. It was not running before Cruz got there. His arrival changed nothing.

Ted Cruz has indeed been acting horribly, lobbing McCarthyite smears and generally playing it up for the rubes back home. Last week, stories and columns ran, effectively simultaneously, in Politico, the Times and the Washington Post, all with the same basic message: Ted Cruz is being a dick. It was almost as if someone was trying to send him a message!

But Ted Cruz being a dick isn’t what has prevented the Senate from accomplishing anything. Ted Cruz’s rudeness isn’t what’s led the Senate to stop performing even its most basic tasks, like confirming uncontroversial agency heads and judges. Ted Cruz’s loudmouthed Senator Asshole routine is not what’s wrong with the Senate. What’s wrong with the Senate is grandstanding buffoons like John McCain who think comity is actually more important than accomplishing anything.

Lindsey Graham told Politico what he says to all new senators: “You’re going to be respected if you can throw a punch but you also have to prove you can do a deal.” Here’s what Lindsey Graham doesn’t ever do: a deal. Graham is a peerless negotiator, but he also always backs out of every deal at the last second because he cares more about the act of negotiation than he does about accomplishing goals through legislation. Ted Cruz didn’t blow up immigration reform on multiple occasions. Ted Cruz isn’t why senators like McCain and Graham decide to stop supporting things they used to support, like cap-and-trade, because of political cowardice or petty grievances over vote scheduling or something.

Because senators refuse to see themselves as unimpressive party hacks, they relish the power that comes with being seen as someone who makes “deals.” And the best way to exercise that power is to negotiate until legislation is objectively worse at accomplishing its supposed objective and then declaring with anguish that you cannot bring yourself to support the result of your negotiation. That is considered very impressive senator-ing. What Lindsey Graham wants is for Cruz to vote exactly the way he’s voting now (when the Senate bothers to vote), but for him to also spend a lot more time pretending he might vote a different way.

The Senate doesn’t work because Mitch McConnell uses every rule at his disposal to block the Senate from working, and he’s allowed to do this because Democrats respect the tradition of Senate collegiality so much that they refuse to end the rules that empower the minority to politely block all Senate business for no reason.

Not long ago, the Wilson Center’s Donald Wolfensberger praised the “gentlemen’s agreement” Harry Reid got instead of filibuster reform as a sign of a new comity golden age.

This year’s failed reform efforts produced headlines such as, “Filibuster Reform Goes Bust” and “Filibuster Lives.” The reality, however, is that the reformers’ bold ploy did force the hand of the bipartisan leadership to work out agreements that will enable the Senate to operate in a more functional and conciliatory manner. That bodes well for getting some important things done this year, even on the eve of what will be a contentious election season.

And then of course Republicans responded by filibustering the nomination of Chuck Hagel as secretary of Defense, a move that was both unprecedented (while a Cabinet nominee has failed an up-and-down vote, none have been actually filibustered) and pointless (because he’ll eventually still be confirmed, in a few more days). They did it because they could, more or less, and while Ted Cruz was one of the loudest voices for the filibuster, it only actually happened because of kings of comity John McCain and Lindsey Graham. They were outraged over Cruz’s out-of-bounds questioning of a Cabinet appointee they then filibustered.

Meanwhile Republicans are still all trying to nullify the Consumer Financial Protection Board, but for the most part they are doing so politely so it is not considered a shocking breach of etiquette or whatever.

Ted Cruz is what’s wrong with the modern Republican Party — he’s an extremist who says outrageous things specifically to be seen as disrespecting “Washington elites” — but what’s wrong with the Senate is just about every other senator, most of whom think their first duty is to be incredibly respectful of one another while never evincing any concern whatsoever for the real-life consequences of their inaction on nearly every single one of America’s most urgent problems, from unemployment to catastrophic climate change. And their tradition of deference to one another, and their high esteem for the broken institution they are members of, is what stops them from doing anything to change the way they don’t do business.

 

By: Alex Pareene, Salon, February 18, 2013

February 19, 2013 Posted by | GOP, Senate | , , , , , , , | Leave a comment

   

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