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The DOL's Fiduciary Rule Is Really a Gift to Wall Street -- and a Trap for Plan Sponsors

"The [DOL] is selling its new fiduciary rule as protection. Protection from lawsuits. Protection through process. Protection via a checklist. But strip away the language, and the reality is far more troubling: This rule is not about reducing litigation. It is about unlocking new revenue streams for Wall Street and the insurance industry -- while leaving plan sponsors holding the liability."  MORE >>

Public Employee Unions Are Indirectly Some of Wall Street's Biggest Customers

"On June 30, 2011, the Maryland State Retirement and Pension System ('the System') reported net assets of $37.6 billion.... During the fiscal year ending June 30, 2011, the System spent $221 million on Wall Street money management fees, though fund management appears to have yielded subpar results. There is substantial evidence that Wall Street managers are unable to beat passive equity index funds that cost much less in fees.... The ratio of the System's Wall Street fees equaled 0.693 percent in FY 2011, above the 0.409 percent of similar state systems nationwide."  MORE >>

Government Worker Pensions ARE Wall Street

"In an editorial posted in January 2011 entitled 'Wall Street & Public Sector Unions,' we identified an irony still lost on the occupy movement's rank and file -- Wall Street is financed by the pension funds of unionized government workers. Every year, taxpayer funded government agencies pour hundreds of billions of dollars into Wall Street investment funds."  MORE >>

Middle-Class People Marching on Wall Street Are Same People Funding Wall Street's Oversized Paychecks

"If change is what they want, they need to educate themselves on how they're actually feeding the Wall Street beast and find better ways to get the message across.... [P]ublic pension funds are some of the biggest investors in private equity firms, a gateway to Wall Street."  MORE >>

Wall Street Bonuses: Where's the Outrage?

Excerpt: So institutional shareholders are upset at the bonuses Goldman Sachs Group is planning to shell out, as we read in today's WSJ. But what about investors at other financial institutions? Where is the outrage there? The complaint of Goldman shareholders is simple: Despite record net income, Goldman's per-share earnings will be 22% lower this year than in 2007 and roughly equal to its 2006 earnings, according to Thomson Financial. Goldman is, of course, the whipping boy of the moment. Whether the criticism is fair or not, Goldman has come to symbolize the perceived inequity between Wall Street and Main Street. And while the government bailed out Wall Street, unemployment stands above 10%, while Goldman's per-employee compensation reaches $717,000.  MORE >>

Solo 401(k) Plans Draw Wall Street Attention as Tax Shelter Demand Soars

"The likes of JPMorgan and Betterment are racing to offer solo 401(k)s to a new cohort: Post-pandemic contractors and self-employed DIY savers looking to shelter more income, grow assets tax-deferred or tax-free, all with the click of a button."  MORE >>

Why the 'Meaningful Benchmark' Standard Is a Judicial Illusion Built for Wall Street

"There is no statute that requires a 'meaningful benchmark.' ERISA's prudence standard focuses on process, not performance relative to a counterfactual benchmark. Benchmarks were a judicial convenience, not a substantive legal test."  MORE >>

Text of EBSA Amendments to Class Prohibited Transaction Exemptions to Remove Credit Ratings Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act

71 pages. "This document amends six class exemptions from prohibited transaction rules ... The amended exemptions are [PTEs] 75-1, 80-83, 81-8, 95-60, 97-41 and 2006-16. The amendments relate to the use of credit ratings as conditions in these class exemptions. Section 939A of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Department to remove any references to or requirements of reliance on credit ratings from its class exemptions and to substitute standards of creditworthiness as the Department determines to be appropriate."  MORE >>

As Wall Street Spasmed with Fear, 401(k) Savers Held Steady

"While professional traders on Wall Street scrambled to sell stocks amid a fear-fueled, nearly 20 percent drop for the S&P 500 late last year, most people at home remained relatively calm when it came to their own retirement savings.... Investors held the steadfast approach even as the average 401(k) balance dropped to $95,600 by the end of the year, down 10 percent from three months earlier."

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Wall Street Furious Over Proposal to Slash 401(k) Limits

"Wall Street pushed back hard on Friday against a report that congressional Republicans are weighing a plan to severely limit the amount of money Americans can contribute to their 401(k)s. The Capitol Hill lawmakers, searching for ways to pay for President Trump's broad proposed tax cuts, are eyeing a $2,400 cap on pre-tax contributions to 401(k) plans ... Currently, the pre-tax limit for such contributions is $18,000 a year."  MORE >>

The Short Scoop on Wall Street's Claim That the DOL Fiduciary Rule Is Too Long

"The broker-dealers and insurance companies, i.e. Wall Street lobbies, have recently berated the [DOL's] fiduciary rules for their length and complexity. Yet, a close examination reveals both the rules' elegance and how the DOL's strong effort to accommodate Wall Street compensation practices was the reason for the rules' reputed length."

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Federal Regulators Propose Tougher Rules Governing Wall Street Bonuses

"Top executives at the biggest Wall Street firms would have to wait four years to collect most of their bonus pay and could be forced to return the money in the event of wrongdoing, under proposed rules unveiled by federal regulators. The rules, which were released [in draft form] by the National Credit Union Administration ... say senior executives at firms worth more than $250 billion must wait to collect 60 percent of their bonus pay. Executives at firms valued at $50 billion to $250 billion would have to wait three years to receive half their bonuses. The rules cover banks, investment advisers and credit unions, as well as mortgage giants Fannie Mae and Freddie Mac."

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This MIT Professor Thinks Wall Street Can Fix High Health Care Costs

"As much as 'financial innovation' has become a dirty phrase since Wall Street brought down the economy, its fingerprints are everywhere. Health insurance, after all, is a type of financial innovation that spreads the cost of health care over a large pool of people. Maybe the way to fix health care costs is smarter financial engineering."  MORE >>

Is Wall Street Robbing New York's Pension Funds?

"New York City's fund managers outperformed their benchmarks by $2.063 billion across the ten-year period under review, and charged $2.023 billion in management fees. Compared with the average public pension fund's experience on Wall Street, this is actually, frighteningly, pretty decent.... [If] the city's pension pool were a sovereign wealth fund, its current value -- a hundred and sixty billion dollars -- would make it the twelfth biggest in the world, ... When you're that big, it's fair to ask why you're paying external managers at all."  MORE >>

Wall Street's Complaints About DOL Fiduciary Rulemaking Don't Withstand Scrutiny

"While the text of the proposed rule is not even yet known, Wall Street knows that their best shot at stopping the DOL's proposed rule on conflicts of interest is that the rule never even sees the light of day. Of course, these same lobbyists have previously stated that they embrace a 'new federal fiduciary standard.' Hence, why are they objecting? Let's examine the three major arguments of these dozens of paid lobbyists and ascertain if they have any validity."

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The Fiduciary Standard and the Economic War Between Wall Street and Main Street

"Given Wall Street's huge economic interest in preserving a product sales mode that many see as a dinosaur, from the extinction event of imposition of fiduciary standards, it is very plausible (and likely) that objections to the fiduciary standard are driven mostly by efforts to preserve a flawed, ancient business model which is neither desired by knowledgeable consumers nor favorable to their financial security. Yet, fiduciary advocates cannot ignore that another reason may exist for those who advocate against fiduciary standards. Perhaps some who oppose fiduciary standards believe that government has no role in imposing standards of conduct."

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Apply the Fiduciary Standard to Reduce the Number of Regulations, the Size of Government, and the Need for Wall Street Oversight

"[S]everal members of the U.S. Congress have urged the [DOL and SEC] ... to either slow down or stop their fiduciary rule-making efforts altogether. Often the reason expressed is concerns about the imposition of more government regulation, as well as reservations about the growth of the size of government. Yet, the contrary result is far more likely, as imposing bona fide fiduciary obligations will likely reduce both the number of government regulations and hold down the size of government. It will also foster the marketplace policing Wall Street, itself, thus substantially reducing the likelihood of the abuses which led to the financial crisis of 2008-9."

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Wall Street's Whipping Boy and a World Without a Fiduciary Standard

"Congress and the government agencies are visited by anti-fiduciary advocates more than 20 times the visits seen by pro-fiduciary advocates. Wall Street's investment banks have committed to each other to spend hundreds of millions of dollars, if that is what it takes, to defeat the application of the fiduciary standard to the investment advisory activities of broker-dealers. If the SEC ever acts on the authority granted it under Section 913 of Dodd Frank ... the fiduciary standard for all who deliver investment advice will be lowered to 'suitability plus a bit more disclosure.'"

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Why Public Pension Funds Are Embracing Wall Street

"[F]rom 2006 to 2012 state pension funds more than doubled their allocations to alternative investments, which include private equity, real estate, hedge funds and commodities. Totaling almost $600 billion, these nontraditional investments now constitute 24 percent of public pension fund assets. In contrast, the funds dropped their investments in stocks to 49 percent from 61 percent over the six-year period."

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Does Wall Street Control Congress? What Can YOU Do

"[T]he DOL's re-proposal of its 'Definition of Fiduciary' rule must, as with all administrative rules, pass through the White House Office of Management and Budget (OMB). Even though the DOL's proposal has not yet been submitted to OMB, Wall Street's lobbyists have been visiting OMB in earnest. Yet, what about the pro-fiduciary advocates ... are they also visiting OMB? NONE HAVE. ([S]everal weeks ago [the author] scheduled a visit to OMB for early June. Yet, one business day before my visit was to occur, the OMB e-mailed me to cancel my visit, with not even an offer to re-schedule. It appears the OMB doesn't even want to hear of the substantial economic rationale for imposition of the fiduciary standard; they may already be convinced by the arguments advanced by Wall Street's lobbyists.)"

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