Yeah, I know – financial regulations make your eyes glaze over. But really, the Turmp roll-backs are important. Here’s how a Facebook friend explained it:
“You know what Obama did? He shut the fox out of the henhouse. That was just stupid, you see, because the fox is actually good for the hens. And they like the fox. Because he’s a great fox, a magnificent fox, and he does great things for those hens. But I know how to fix this. So I’ll tell you what I’m going to do: I’m going to put the fox back in the henhouse, just like that. I’m going to make you hens pay for it, but you’ll thank me, because it’s going to be great having that fox in there, believe me.”
As Senator Elizabeth Warren explained in a little more formal terms:
“Today, after literally standing alongside big bank and hedge fund C.E.O.s, he announced two orders—one that will make it easier for investment advisers to cheat you out of your retirement savings, and another that will put two former Goldman Sachs executives in charge of gutting the rules that protect you from financial fraud and another economic meltdown.”
Making cheating legal again
The Obama administration issued a regulation ordering financial advisors and brokers to put their clients’ interests first. These are people paid to advise you about how to invest your retirement savings. In formal language, the regulation “requires financial advisors and brokers to have a fiduciary relationship with their clients.” That means that when they tell you how to invest your retirement savings, they should look out for your interests. They should not advise you to make the investments that will give them the biggest commissions or profit.
Trump says that’s wrong. Financial advisors should not have to put clients first. If they can make more money for themselves or for the big financial institutions they work for by putting your interests last – that’s just business. After all, you are free to choose a financial advisor – if you choose one who puts your interests last, that’s still your choice.
“We think it is a bad rule. It is a bad rule for consumers. This is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”
Trust Wall Street – they’ve never led us wrong before
We had a big recession in 2008: unemployment soaring, stocks losing value, people losing their homes – really bad times. Banks and other financial institutions gambled with our money, our homes, and our lives. They were free to screw us because of a previous regulation roll-back. Dodd-Frank put some of the regulations back, trying to force financial institutions to be responsible stewards of the money they handle. Now Trump is trying to gut those regulations. The Republicans in Congress are on the same page, introducing legislation to repeal Consumer Financial Protection Bureau regulations.
“They made money by selling short on the financial catastrophe they had created. JP Morgan was fined $296.9 million and Goldman Sachs was fined $550 million for actions.”
Financial regulations are complex, and it’s hard to know exactly what Trump’s vague executive order will actually do. What’s clear is that he is not looking out for consumers. He’s looking out for big business and financial interests. Here’s what Trump said:
“There is nobody better to tell me about Dodd-Frank than [JP Morgan C.E.O.] Jamie [Dimon]. So he has to tell me about it, but we expect to be cutting a lot from Dodd-Frank because, frankly, I have so many people, friends of mine, that have nice businesses, they can’t borrow money. They just can’t get any money because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”
That’s right. Trump’s friends can’t borrow money because of the pesky rules and regulations put in place to protect consumers and homeowners and to prevent another financial meltdown.
Here’s what you can do:
1) Call Senators and Congressional representatives with this message:
I’m a constituent from (YOUR CITY AND STATE.) I’m calling to tell you I want to keep the Dodd-Frank consumer protections in place and to keep the rule that says financial advisors have to put client interests first in investing retirement savings. I don’t want Wall Street rewriting the rules to make themselves richer.
2) Read more about it:
- Trump Moves to Roll Back Obama-Era Financial Regulations (New York Times, 2/2/2017)
- Say Goodbye to Your Life Savings (Again) (Esquire, 2/3/2017)
- Trump says he cut Wall Street reform because his “friends” need money, (Huffington Post, 2/2/2017)
- A new Obama rule could save ordinary investors billions in hidden fees (Vox, 12/21/2105) – describes the fiduciary rule that Trump is getting rid of.