Last year, the Huffington Post published the definitive take on the Congressional Black Caucus’ frequent sellouts to Wall Street, and how Maxine Waters has attempted to shut it down. Their public image as the conscience of the Congress belies a coziness with bank lobbyists and an open willingness to do their bidding. Ten CBC members sit on the House Financial Services committee, and can often convince those who don’t to go their way.
One of the more notable issues the CBC has worked on serves the interests of all their constituents in the asset management industry:
In June, 28 CBC members sent a letter to the Department of Labor, urging it to reconsider a rule requiring retirement account managers and investment advisers to act in their clients’ best interests — what is known in finance as a “fiduciary duty.” Fudge told us she was worried the rule would limit minority access to financial advice. But the letter was actually written by Robert Lewis, a lobbyist at the Financial Services Institute, who forgot to scrub his metadata from the document before circulating it around the Hill.
That half-assed job didn’t work out for the CBC; the Labor Department issued its fiduciary rule back in April. And despite an exhaustive series of hearings back in August and more expected in September, Labor Secretary Thomas Perez announced he plans to move forward on finalizing the rule sometime before the 2016 elections.
This hasn’t stopped the CBC from trying to kill the rule. This is from D.C. house organ The Hill:
Wall Street is wooing black lawmakers as part of their effort to block a controversial rule championed by President Obama that would change the way financial advisers operate […]
Some members of the Congressional Black Caucus (CBC) have been receptive to arguments about the rule, which has divided Democrats.
“Rich people are always going to get advice,” one aide to a CBC member concerned by the rule said. “But it’s the poor people — many of which are our constituents — who we’re concerned about.”
This is an insane argument. In essence, asset managers are saying that they only way they can afford to offer financial advice to low and middle-income earners is if they screw them. If you force them to act in their clients’ interest, it won’t become cost-effective. So CBC members want to protect their constituents’ ability to get sham advice contrary to their interest? There is no question that these constituents would be better off with no advice at all.
This is another case of Maxine Waters versus the sellouts. She’s been waging this war with her membership for going on three years now, and it’s like pulling teeth.
CBC Reps. David Scott (D-Ga.) and Lacy Clay (D-Mo.) signed onto a bipartisan letter in July calling on Obama to issue a re-proposal of the rule. CBC Reps. Gwen Moore (D-Wis.) and Frederica Wilson (D-Fla.) are also seen as having concerns with the rule, according to multiple sources.
CBC Reps. Bobby Scott (D-Va.) and Waters have spoken out in favor of the regulation, as has Sen. Cory Booker (D-N.J.), the only CBC member in the Senate.
There are two things to look out for here. First, the House is poised to pass a bill called the Retail Investors Protection Act, which also passed in 2013 with Democratic support. This is a purely dilatory measure that sequences the DoL’s rule behind a similar rulemaking from the SEC. As you might expect, the SEC is in no hurry to write their fiduciary rule, so it’s just a way to delay the Labor Department. It would also add a whole bunch of cost-benefit analyses to slow down the rule should the SEC ever get around to it.
The House will surely pass this, and how much CBC support they get could be critical. The Senate might take a whack at this, and while Democrats might hold together to filibuster, Claire McCaskill is making some noises against DoL’s rule, and you can surely find a few Senate Dems to agree with her.
The other, more critical threat comes from a rider delaying the rule that could go into whatever government spending bill Congress reads out at the end of the month. The rider would defund any efforts to complete or enforce the rule. That’s a bigger deal, and CBC support would again add credibility to the effort.
Obviously, if you’re in the districts of David Scott, Lacy Clay, Gwen Moore or Federica Wilson, you could let them know how you feel. But of course one reason these lawmakers thrive on giving Wall Street a hand is that they’re in safe seats with voters who aren’t attentive to the maneuvers of the banking industry, even when as in this case it affects them. That’s part of the whole game here.
Keep in mind that the Labor Department has been writing this thing for over five years. The industry is making a last-ditch effort to sink it, and going back to the well of members of Congress who prefer personal aggrandizement and nice lobbying jobs for their staffs over their own voters. I thought Waters had this more under control, but it’s sad to see what some members will do for a buck.