Sen. Elizabeth Warren Tries to Silence Fiduciary Rule Critics
#LetLizSpeak was a hashtag used by fans of Sen. Elizabeth Warren (D-MA) as they rallied to her defense this week. Warren had been barred from speaking by Senate Majority Leader Mitch McConnell (R-KY) after she read letters criticizing then-Sen. and now-U.S. Attorney General Jeff Sessions (R-AL) from the late Sen. Edward Kennedy (D-MA) and civil rights leader Coretta Scott King.
Majority Leader McConnell rose and said Warren was in violation of a Senate rule that forbade impugning “the motives and conduct” of a fellow senator. The GOP majority then voted to bar Warren from speaking on the floor for the rest of the debate on Sessions’ nomination to be attorney general.
The Senate leadership may have been technically correct about Warren’s violations of the rules, but temporarily silencing her caused a huge and unnecessary backlash. Warren’s supporters were justified in claiming the leaders were cutting off ideas they disagreed with.
But what’s overlooked by Warren cheerleaders is that Warren herself has frequently resorted to intimidation to effectively silence those with views which she disagrees. This is particularly true for critics of the “fiduciary rule” from the Obama Department of Labor.
The fiduciary rule, set to go into effect in April but now under review by an executive order issued last Friday by President Donald Trump, mandates that financial professionals only recommend investment options for 401(k)s and individual retirement accounts (IRAs) that the government believes to be in savers’ “best interest.”
The Financial Times, in an editorial supportive of the rule and critical of Trump’s order to review it, nevertheless conceded that there are “reasonable objections” to the rule. These include increased client fees that could lead to less access to investment advice and that trial lawyers could bring frivolous lawsuits every time the market fails.
Yet Warren has implicitly threatened the livelihood of several fiduciary rule critics making those and other arguments. In late 2015, she attacked center-left scholar Robert Litan, a former Clinton administration official, for suggesting that the Department of Labor propose an alternative standard improving disclosure rather than restricting investment choices.
Warren wrote to the Brookings Institution, where Litan had for years been a non-resident senior fellow, with bogus complaints that Litan did not disclose strongly enough that he received industry funding (as I noted in the Daily Caller, Litan actually disclosed that fact on the front page of his report!). Brookings, home to many former Democratic officeholders, caved and sought (and received) Litan’s resignation.
Now Warren is engaging in similar tactics by writing letters to brokerage firms asking if they will be in compliance with the fiduciary rule when it goes into effect. She is pointing to their affirmative answers—firms generally comply with laws rather than risk penalties—as evidence that they are fine with the fiduciary rule and there is no need to delay or rescind it.
Barbara Roper of the Consumer Federation of America, longtime anti-investor choice activist who even opposed the modest investor freedom of the bipartisan Jumpstart Our Business Startups (JOBS) Act signed by President Obama in 2012, went a step further by co-authoring letters to the board members of the Securities Industry and Financial Markets Association (SIFMA) asking them to publicly distance themselves from the opposition SIFMA has expressed to the rule.
In response, SIFMA President Ken Bentsen replied in a statement:
SIFMA’s member firms have spent the last eighteen months preparing for compliance, even while we have argued there is a better way, because if it’s the law, we comply. To assert that compliance means firms should not seek to improve what we believe is a flawed rule is nonsensical. Abiding by the law should never be misinterpreted as an endorsement.
(Note: I received this statement via email and could not, at press time, locate it online)
So how about hashtags that say, #LetInvestorsInvest, #LetSaversSave, and #LetFiduciaryRuleCriticsSpeak?