[Lexington]

The US financial and banking system has gone almost seven full years without experiencing a major crisis. With today’s announcement from the administration that Dodd-Frank regulations are about to be dismantled, this nightmarish period of excessive stability will finally be coming to a close.

According to White House National Economic Council Director Gary Cohn, the former president of financial crisis experts Goldman Sachs, “We have the best, most highly capitalized banks in the world, and we should use that to our competitive advantage. But on the flip side, we also have the most highly regulated, overburdened banks in the world.”

Cohn deftly sidesteps the fact that our “most highly capitalized banks” have gotten that way thanks to the very regulations and increased capital requirements that are now on the menu to be carved up. To which we say, good riddance. It’s about time that America’s deposit-taking institutions got back to the business of leveraged speculation, empire building and unchecked expansion that made this country what it is today – a culturally divided paradise of extreme wealth disparity and populist rage.

The tens of millions of Americans who came out to vote for Donald Trump and the subsequent hundreds who attended his inauguration have grown sick and tired of the burdensome protections and safeguards that have been put in place for them. All across the nation, working class people yearn for a world in which Citigroup and Bank of America can borrow unlimited sums of money for concentrated bets, trade in exotic securities that are barely understood and sell whatever products they want to whomever they choose.

In eliminating toxic investment choices from the consumers’ grasp, the quasi-marxist Department of Labor has taken our freedom to not retire away from us. The idea that financial professionals should be forced to sit on the same side of the table as their less knowledgable customers is the biggest regulatory overreach since the outlawing of asbestos in building construction. These limitations on our liberty will not stand.

America’s banks must be globally competitive again. For too long, the banking giants of Europe of have outpaced their US counterparts in their ability to routinely sustain massive, unthinkable losses. Germany’s Deutsche Bank and Italy’s Banca Monte dei Paschi have been afforded the opportunity to lose tens of billions of dollars, year after year, while the JP Morgan Chases of the world have been effectively sidelined. With the loosening of reserve requirements and international capital rules, our great domestic financial institutions will finally be able to rejoin the fray.

We applaud the coming castration of The Dodd-Frank Wall Street Reform and Consumer Protection Act and the immediate freeze on The Department of Labor’s Fiduciary Rule. With US household net worth ending 2016 at $90 trillion, significantly above its peak from before the great recession, it is clear that these restrictions have been doing a great deal of harm to American families. As stocks race toward record highs and interest rates begin to rise, there has never been a better opportunity for systemically important financial institutions to begin taking additional risk.

Just to be clear: Josh is being sarcastic.

President Donald Trump has begun killing off an Obama-era retirement-savings rule unpopular with Republicans and some financial-industry executives who say it would harm consumers more than help.

The so-called fiduciary rule, six years in the making and unveiled by the Labor Department last spring, holds brokers and advisers who work with tax-advantaged retirement savings to a fiduciary standard as opposed to the previous suitability standard. That means they must work in the best interest of their clients and generally avoid conflicts, which can come about with the commission-based compensation common among brokers and insurance agents.

While a memorandum from Mr. Trump gives the Labor Department discretion over whether to revise or rescind the rule, it puts off the April 10 implementation deadline and prevents the rule from taking effect.

“We think it is a bad rule. It is a bad rule for consumers," said White House National Economic Council Director Gary Cohn in an interview with The Wall Street Journal on Thursday. “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.”

Nevertheless, even if the rule is undone, many in the financial-services industry say its tenets were becoming the industry standard, as many Wall Street firms have taken steps to comply and advertised their commitment to acting in clients’ best interest.

The rule was long fought between the industry and the government. The Obama administration, in pressing for the rule, said conflicted advice costs American families $17 billion a year and pushes down annual returns on retirement savings by a percentage point. Many financial-industry leaders have said those figures are inflated and have fought against the regulation. Consultancy AT Kearney projected that the rule would result in as much as $20 billion in lost revenue for the industry, about 7% of total revenue in 2015.

Critics have long contended that the rule would punish smaller savers in the form of less access to financial advice and heftier fees for those who trade infrequently. While a fee-based model eliminates conflicts of interest that commissions can usher in, some savers may find themselves paying more in fees than they have in commissions.

The insurance industry has also bucked against the rule, as it would effectively put out of business certain annuities sellers. Chip Anderson, executive director for the National Association for Fixed Annuities, a trade association, said more than 50% of the annuities industry would be “severely affected,” with potentially half of the industry’s jobs at stake. The association and other critics have contended that the Labor Department overstepped its authority in crafting the regulation and that it would have an “immediate and devastating effect” on its industry.


The rule was particularly tough on sellers of indexed annuities, which pay interest income tied to the performance of a stock-market index and protect against market declines. Sales of variable annuities, where money is invested on a tax-deferred basis, have also been expected to be hit by the new standard. By contrast, fixed annuities, on which the insurer pays interest, have generally been exempted from fiduciary requirements.

In addition to commissions, agents selling indexed annuities often were awarded other incentives to sell indexed annuities, such as vacations, car leases and other perks. Sen. Elizabeth Warren (D., Mass.), a strong supporter of the new fiduciary rule, had previously criticized such practices. While an exemption under the fiduciary rule would allow certain advisers to conduct business as usual as long as they lay out conflicts of interest, critics said the exemption was onerous and that some independent agents inherently couldn’t comply.

Despite the industry’s resistance to the rule, some of the biggest brokerages in the U.S. have embraced changes to how their brokers work with retirement savers. And some of those firms aren’t planning to back off from those initiatives.

Merrill Lynch, which has more than $2 trillion in client assets, has said it would stick with its plan, announced in October, to end commission-based retirement accounts even if the rule gets killed. The firm will instead charge a fee based on a percentage of assets. The Bank of America Corp.-owned brokerage has enacted a host of other changes, including simpler monthly account statements that more plainly state the fees investors pay and a slimming down of investment products offered by brokers.

“We will continue to implement a heightened standard of care for delivering personalized investment advice, especially for investment advice about retirement accounts,” Andy Sieg, head of Merrill Lynch, has said.

Other brokerages such as Morgan Stanley, Wells Fargo & Co. and LPL Financial Holdings Inc. hadn’t taken the drastic step of eliminating commissions as an option for retirement savers, choosing to offer both. But other changes ahead of the rule’s previously planned implementation deadline are moving ahead.

Morgan Stanley recently told its brokers it would move ahead in any political scenario with changes to product pricing, such as lowering the price of commissions tied to stocks and exchange-traded funds. Wells Fargo, meanwhile, will also keep certain aspects, such as heightened oversight of retirement accounts, people familiar with the bank’s strategy previously said. And LPL had implemented lower account minimums on fee-based accounts and other pricing changes.

Almost all firms are still rolling out robo advice providers, which were meant, in part, to help comply with the rule and offer small retirement savers access to cheap investment advice.

Craig Pfeiffer, president of the Money Management Institute, a group representing firms across the financial-services industry, said that even in the case of repeal, "We're not going back to lower standards"

I bolded that section about the fiduciary rule. This personally affects me because I'm a CFA charterholder with a Series 7 license. I can give you financial advice and do brokerage for you. I won't because I work in derivatives and you aren't a bank, insurer, or pension fund which would want these products. Here is your financial advice.

Now if you read that one of the items is "Make financial advisor commit to a fiduciary standard"

The fiduciary rule says that I am required to act in your best interest in providing you that advice. You can sue me if I give you advice that is adverse: like you come to me or call me and I knowingly sell you a piece of shit. Now I can lie straight in your face.

Also the capital requirements. It's stupid enough about the fiduciary thing but the capital requirements.