July 30, 2015

Financial Reform Newsletter – July 30th, 2015

The American people deserve to know where candidates stand on Glass-Steagall: Hillary Clinton, Martin O’Malley and the other presidential candidates, along with Sens. Elizabeth Warren and John McCain, are talking about the Glass-Steagall Act, which needs to be informed by context, facts and nuance. That’s why Better Markets has released a fact sheet about the Glass-Steagall financial reform law and efforts to reinstate it.

Passed after the Great Crash of 1929 and during the Great Depression of the 1930s, the Glass-Steagall Act was one of the key layers of protection created to shield the families on Main Street from the gambling on Wall Street. Those protections worked for more than 60 years. The repeal of Glass-Steagall in 1999 was a key part of the bipartisan deregulatory agenda that dismantled those protections and inflicted Wall Street’s recklessness on Main Street’s hardworking families. That, in part, led to the financial crash of 2008 and caused more than $20 trillion of economic wreckage across the country.

The debate over restoring Glass-Steagall is about how best to rebuild those layers of protections and prevent another crash, crisis and bailout. Reinstating this law is not the only solution and it won’t solve too-big-to-fail by itself. It can, however, be an important part of an overall plan to reduce the risk on Wall Street while increasing the protections for Main Street.

That’s why, as the campaign continues, voters deserve to know whether each candidate supports reinstating a Glass-Steagall-like law or other concrete proposals that will protect America’s hardworking families and take them off the hook for future bailouts. Hopefully, the fact sheet will focus this discussion on the facts and not spin and posturing. Click here to view the fact sheet.

BREAKING: Rick Perry, former Governor of Texas and a Republican presidential candidate, just said “we could once again require banks to separate their traditional commercial lending and investment banking and related practices,” i.e., a Glass-Steagall-like structural reform. That’s not enough (and “could” isn’t “would”), but at least Gov. Perry is responding to voters’ interests and specifically addressing financial reform.

Supporting the Department of Labor’s “client’s best interest first” fiduciary duty rule: Better Markets recently filed a comment letter in support of the Department of Labor’s best interest rule to protect Americans from conflicts of interest when brokers and other financial advisers provide retirement investment advice. The 40 year-old rule that allows brokers to put their interests above their clients’ best interests when seeking retirement advice must end. That’s what the Department of Labor’s proposed “client’s best interest first” fiduciary duty rule does, which will save Americans saving for retirement tens of billions of dollars a year.

The retirement landscape has profoundly changed since the old rule was first adopted in 1975, and it’s time to finally close the 40 year-old loophole and require everyone providing retirement investment advice to act solely in the best interests of their clients. Our letter rebuts the groundless arguments from those in the financial services industry who have made the defeat of this rule their top priority, so they can keep an average of $43 billion going into brokers’ pockets every year instead of their clients’ retirement accounts. The status quo is unacceptable. The President and the Department of Labor should continue standing up to Wall Street’s special interests and finalize the strongest rule possible as quickly as possible to help tens of millions of Americans build the dignified retirement they expect and deserve.

Click here to view the comment letter, and click here to view the fact sheet. To view all of Better Markets recent comment letters, click here.

Senate Appropriations Committee includes Wall Street deregulation provisions in spending bill: As we said in a press release this week, the actions by the Republicans on the Senate Appropriations Committee to de-regulate Wall Street while under-funding the Wall Street cops at the CFTC and SEC are an insult to the American people who are still suffering from the last crash. This Wall Street wish list of irresponsible provisions is going to make another financial crash and economic calamity more likely. With the nationwide wreckage from the last crash costing American families more than $20 trillion in lost jobs, homes, savings, retirements, and so much more, unleashing Wall Street to do that again is indefensible.