Paul Krugman: Springtime for Scammers
-- via my feedly newsfeed
Springtime for Scammers, by Paul Krugman, NY Times: ...Donald Trump ... and his allies in Congress are making it a priority to unravel financial reform — and specifically the parts of financial reform that protect consumers against predators.
Last week Mr. Trump released a memorandum calling on the Department of Labor to reconsider its new "fiduciary rule," which requires financial advisers to act in their clients' best interests — as opposed to, say, steering them into investments on which the advisers get big commissions. He also issued an executive order designed to weaken the Dodd-Frank financial reform...
Why ...was the fiduciary rule created? The main issue here is retirement savings..., "conflicted investment advice" has been ... costing ordinary Americans around $17 billion each year. Where has that $17 billion been going? Largely into the pockets of various financial-industry players. And now we have a White House trying to ensure that this game goes on.
On Dodd-Frank: Republicans would like to repeal the whole law, but probably don't have the votes. What they can do is try to cripple enforcement, especially by undermining the Consumer Financial Protection Bureau, whose goal is to protect ordinary families from financial scams. ...
Remember the Wells Fargo scandal...? This scandal only came to light thanks to the bureau.
So why are consumer protections in the Trump firing line?
Gary Cohn, the Goldman Sachs banker appointed to head Mr. Trump's National Economic Council — populism! — says that the fiduciary rule is like "putting only healthy food on the menu" and denying people the right to eat unhealthy food if they want it. Of course, it doesn't do anything like that. If you want a better analogy, it's like preventing restaurants from claiming that their 1400-calorie portions are health food.
Mr. Trump offers a different explanation for his hostility to financial reform: It's hurting credit availability. ... What we do know is that U.S. banks have generally shunned Mr. Trump's own businesses ... perhaps because of his history of defaults.
Other would-be borrowers, however, don't seem to be having problems. ... Overall bank lending ... has been quite robust since Dodd-Frank was enacted.
So what's motivating the attack on financial regulation? Well, there's a lot of money at stake — money that the financial industry has been extracting from unwitting, unprotected consumers. Financial reform was starting to roll back these abuses, but we clearly now have a political leadership determined to roll back the rollback. Make financial predation great again!
-- via my feedly newsfeed