During the campaign, Donald Trump ranted against the “global power structure” that has “robbed our working class… and put that money into the pockets of a handful of large corporations and political entities.” He promised to fight this “rigged system” on behalf of ordinary Americans, and would often cite Goldman Sachs, the New York investment bank, as the epitome of that global power structure.
Yet last week, as Trump was signing executive statements on financial deregulation, a tall bald man stood looking over his left shoulder. The man’s name is Gary Cohn. Until late last year, Cohn was president and chief operating officer of Goldman Sachs. Today, he is Trump’s chief economic adviser and head of the National Economic Council. As Cohn looked on, Trump signed an order that instructs Treasury Secretary Steve Mnuchin — another Goldman Sachs alumnus — to work to remove restraints on the financial industry that were imposed to prevent another 2008 Wall Street meltdown.
Under those rules, for example, banks that rely on Federal Reserve deposit guarantees are no longer allowed to bet on highly speculative and risky investments. Trump’s executive order attempts to undermine that restriction as much as possible until the Republican Congress can take more complete action.
Trump then turned to sign a second presidential decree, this one dealing with the relationship between stockbrokers and their clients. Most people think of their stockbrokers as investment advisers who are paid to help them maximize their wealth, but that’s not the case. Legally, stockbrokers are basically high-end salesmen who have no obligation to act in their customers’ best interests. Brokers can — and very often do — steer their clients into high-commission, high-fee investment products that make the brokers a lot of money, but eat up a big share of their clients’ retirement savings.
Under rules initiated by the Obama administration and due to take effect in April, that would change. Stockbrokers for the first time would have a fiduciary obligation to their clients, meaning that they would have to put their clients’ financial interests ahead of their own. Consumer protection groups, AARP and other groups strongly support that change, but the financial industry strongly opposes it because it strikes at a lucrative revenue stream.
The memo signed by Trump begins the process of repealing that rule, much to the glee of the woman looking over Trump’s right shoulder during that ceremony. U.S. Rep. Ann Wagner, R-Mo., has led the fight against the so-called “fiduciary rule,” and a peek into her campaign finance disclosures shows you why. Over the past two years, the finance, insurance and real estate industries have contributed almost $900,000 to her campaign coffers.
Of course, to hear Wagner tell it, she’s not doing it to help Wall Street at all. Instead, she says, “we are returning to the American people — low- and middle- income investors and retirees — their control of their own retirement savings.” That’s right, they’re doing it for the little guy. Out of the goodness of their beneficent hearts, Wall Street brokerage firms have spent millions of dollars lobbying against the fiduciary rule and invested millions more in politicians such as Wagner to ensure that small-time investors will still have the freedom to be duped into high-fee, high-commission investments.
And in President Trump, they have a leader who is more than happy to help them out.
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