The Pardu

The Pardu
Watchful eyes and ears feed the brain, thus nourishing the brain cells.
Showing posts with label Department of Labor. Show all posts
Showing posts with label Department of Labor. Show all posts

Saturday, July 16, 2016

President Obama Vetoes On Behalf Of Middle America

Fiduciary Rule:

A Department of Labor regulation prohibiting investment advisers from selling products with higher fees or lower returns just because they yield higher commissions.

Why would anyone in federal, state or local governance have issues with such a rule? If we consider US politics, the question becomes rhetorical. Which governing entity do you feel has issues with a fiduciary rule? (Rhetorical)

I recently sought out a few horror stories regarding investment advice/hype while contemplating the GOP's strong resistance to efforts to protect investors from investment predators. A story on the Reddit  r/stocks web page, caught my interest. The story that appears to embody the essence of Department of Labor efforts to protect against financial investment vultures.(The parenthetic descriptor was a personal add to the comment.)

This story was explained to me by a senior broker where I work. 
An elderly couple bought into the hype on ICPT (Intercept Pharmaceuticals IncNASDAQ: ICPT) last year and decided to move all their money out of an IRA into a margin account so they could day trade. Neither of them had ever traded before, but they decided now was the time. As luck would have it, they started the day that ICPT crashed a huge amount, sometime in March 2014 I believe. They bought as much as they could as it kept falling, fully leveraging their account. After ICPT had already lost something like $50 they started selling, but it was too late. At the open, they had +70k, and at the close they were at -250k. This was their life savings, and they had just lost it all and then owed us more than triple what they started with.

The story may not totally embody guidance from financial investors, it certainly shows the extent to which following bad financial advice can ruin the financial health of citizens.  

While exploring a core value of the GOP, follow as we explore points embed in a "fiduciary rule" promulgated by the Obama Administration. 

“fiduciary rule”

financial services industry advisers and managers must perform services for clients with a guiding focus as fiduciaries – effectively requiring advisers to  “solely in the interest” of clients – when giving advice regarding people’s retirement saving.
Are you wondering why such a "rule" would meet strong resistance from Republican members of Congress? Let's look a bit closer.

Within a year of President Obama's 2009 inauguration to the US Presidency, the Department of Labor (DOL) proposed a rule that would require financial advisers provide investment services in the best interest of their clients. The proposal was she

In 2010, the Department of Labor put forth a proposal to require retirement investment advisers serve in their client’s best interest. The DOL later withdrew the proposed rule in the in response to formidable GOP opposition.  In early 2015, DOL proposed a new "fiduciary" rule.

On April 20, 2015, DOL proposed a new rule to ensure that retirement savers would get their advice from fiduciaries. After a series of unsuccessful efforts to block the proposal by brokerage firms and a failed attempt to attach a rider to the end-of-year spending bill, the final rule was released on April 6, 2016.
If you re-read the last sentence from the MarketWatch excerpt, the genesis of GOP opposition to the rule comes as clear as the proper camera setting on a Nikon Series 5000 camera. GOP members of Congress (and certain blue dog Democrats) opposition to rules the protect consumers is a core value.  A value that drives GOP policy with legislative and validates the party's service to monied interest and potential campaign contributors.

Last month, both House of congress voted in support of striking the fiduciary rule: the House by a party-line vote of 234-183 and the Senate 56-41, with three Democrats joining the Republicans. Republicans Senator Orin Hatch commented on GOP perception of the rule. white urging passage i the US Senate.  Note the corporatist tone of his comment. 
"Higher costs and a more burdensome system also means more expenses for small businesses trying to sponsor retirement plans for their employees,”
The shame of it all. Do everyday Americans stand ay chance of a productive life as long as the GOP has a group on Congress?

It is refreshing to know Democrats do to share GOP dedication to a better life for corporate  America at all costs.  President Obama recently vetoed the bill.

President Obama the fiduciary rule

The White House
Office of the Press Secretary
For Immediate Release

Veto Message from the President -- - H.J. Res. 88

I am returning herewith without my approval H.J. Res. 88, a resolution that would nullify the Department of Labor's final conflict of interest rule.  This rule is critical to protecting Americans' hard-earned savings and preserving their retirement security.
The outdated regulations in place before this rulemaking did not ensure that financial advisers act in their clients' best interests when giving retirement investment advice. Instead, some firms have incentivized advisers to steer clients into products that have higher fees and lower returns -- costing America's families an estimated $17 billion a year.
The Department of Labor's final rule will ensure that American workers and retirees receive retirement advice that is in their best interest, better enabling them to protect and grow their savings.  The final rule reflects extensive feedback from industry, advocates, and Members of Congress, and has been streamlined to reduce the compliance burden and ensure continued access to advice, while maintaining an enforceable best interest standard that protects consumers.  It is essential that these critical protections go into effect.  Because this resolution seeks to block the progress represented by this rule and deny retirement savers investment advice in their best interest, I cannot support it.  I am therefore vetoing this resolution. 


Can anyone who read this piece recall a legislative measure advanced by the GOP which offers improvements to life for middle and lower income Americans?  Think hard and dispense the thought that would come forth as a lie.


Saturday, February 16, 2013

US Economy: Progress and a Lomming Threat

Economic news continues to skewer to the positive.  We are fortunate the news is good.

The economy is improving, but as is the case with all things 112th and 113th Congress, there is trouble on the horizon.  The Obama Administration (which is singularly responsible for our improving economy) and obstructionist legislative bodies are moving the nation closer and closer to the self-imposed "Sequester".   

Congress is in "recess" as of yesterday with three to four days in session before the sequester kicks-in.  We can only hope our broken federal government avoids dragging the nation into a recession.

Our periodic visits to the following economic data could very well reflect a "snapshot of what might have been": an economy improved to the level of approaching fully recovered. "Fully recovered" is not practical, but steady progress from the Obama Team since the hard-fought Stimulus is welcome . 

Let's take a quick journey through relevant economic indicators. 

  Budget, Deficit and all related

Huffington Post is reporting economic performance for January that provides additional indicators our economy is slowly coming back to life.
The Treasury Department said Tuesday that the government took in a surplus of $2.9 billion in January, helped by nearly $9 billion more in Social Security taxes. Last month Congress and the White House allowed a temporary cut in Social Security taxes to expire.
The monthly surplus was the first since September.
Through the first four months of the 2013 budget year, the deficit has grown $290.4 billion. That's nearly $60 billion lower than the same period a year ago.
Revenue through those four months is 12.4 percent higher compared with the same period last year, while spending has grown only 3.5 percent.

The budget year began on Oct. 1.

Business InsiderUS Budget Surplus  

us budget surplus

Economic Confidence (Gallup)
February 5, 2013
Monthly U.S. Economic Confidence Matches Five-Year High

Economic confidence improved most weeks in January

by Dennis Jacobe, Chief Economist 

WASHINGTON, D.C. -- U.S. Economic Confidence improved to -13 in January, matching the five-year monthly high set in November 2012. Economic confidence improved steadily from September to November before falling back to -17 after the presidential election, but has now returned to its pre-election peak.
Gallup Economic Confidence Index -- Monthly Averages, 2008-2013
These results are based on Gallup Daily tracking interviews, conducted by landline and cellphone, with more than 14,000 Americans from Jan. 2-31.
  US Department of Labor Employment 

January’s report marks 35 consecutive months of private sector job growth totaling more than 6.1 million jobs. It also shows that the economy gained 2.25 million private sector jobs in 2012, which includes an annual revision to the survey that resulted in an additional 424,000 jobs.
Chart showing monthly change in total private employment.
Monthly Change in Total Private Employment, February 2008 - January 2013. Source: Bureau of Labor Statistics, Current Employment Statistics Program.
Our recovery from the Great Recession continues at a steady pace as we build on previous gains in job creation. The recent strengthening of the housing market, in particular, is driving welcome growth in construction employment, with 98,000 jobs added over the past four months and 296,000 jobs over the past two years. Retail jobs, health care jobs, and professional and business services jobs also contributed to the positive numbers in today’s report.
Chart of employment in major industries
Employment in Major Industries Since the Employment Trough, February 2010 - January 2013. Source: Bureau of Labor Statistics, Current Employment Statistics Program.
Over the last three months, we’ve added an average of 208,000 private sector jobs, and that is a real testament to the resilience of our economy. But there is more work to do.

  Employment, GDP, CPI, Retail Sales, Industrial       Production (The St. Louis Federal Reserve Bank)

See more after the break