Regulatory capture is rampant, fueling the ongoing retirement crisis and the ongoing skimming of American’s retirement nest eggs by Wall Street financial intermediaries. There is also a shocking proliferation of Congressional Capture. As Firedoglake wrote, “Wall Street Lobbyists Literally Writing Bills in Congress.”
There are so very few in Congress that will stand-up to Wall Street to implement the key legislative measures that will make a difference to protect those that have lost so much as a result of the 2008 financial crisis–from lost jobs for our youth to unprecedented low interest environment impacting retirees. There are a few very key measures that must be taken to protect the life savings of every American, that elected Congressional representatives refuse to take.
In fact, many Democrats are crossing party lines and joining with Republicans to ensure financial intermediaries can continue to act in their interest, not in the interest of the consumer or investor’s IRA Account.
Wall Street Dollars and Ongoing Lobbying of Congress Ensures Wall Street can Continue to Act in their Interest, not the IRA Investor’s
Here is a little history on Democrats and Republicans, in Congress, joining forces to protect Wall Street over the best interest of the IRA investor.
GOP Joins the Democrats Asking DOL to Put Wall Street Profits Over Safety of IRA’s December, 7, 2011 The Derivative Project
Democrats Ditch the Little Guy’s ERISA Fiduciary for IRA’s and Choose Brokerage Industry’s Interests November 10, 2011 The Derivative Project
Unfortunately, these are the issues that members of Congress and the media are loathe to address. Why? Quite simply, the conflicted Congressional representatives know certain stances will cut- off their funding from Wall Street, whether that be in campaign contributions or in the case of media, advertising revenues. Ironically, certain proposed legislative issues recommended by Dodd Frank in July 2010, have yet to be addressed by agencies such as the SEC.
Why? These are the issues that will effectively limit Wall Street from out-sized profits from the raiding of American’s life savings in their IRA’s. These are easy profits for Wall Street —skimming from the poorly informed American retirement investor, who somehow, still naively believes even after $2 trillion dollars were lost in retirement accounts in 2009– broker and investment advisor intermediaries are ‘fiduciaries’ and will act in their best interest. It matters, as the SEC reported here: FINRA Survey Identifies Rampant Fraud by Advisors: SEC and FINRA, Look in the Mirror
The Derivative Project first wrote Senator Franken, in his role on the Senate Judiciary Committee, in 2010 and again in 2012 about the abuse by Wall Street in limiting an individual IRA investor’s right to go to court when their IRA nest egg has been harmed by Wall Street. We submitted this request to the SEC to ban Mandatory Arbitration: Petition for Rule Making: April 3, 2012 and forwarded for assistance by Senator Franken’s office.
Senator Franken Took the Lead – Letter to SEC Chair Mary Jo White to Ban Mandatory Arbitration
Senator Franken is one of the so very few in Congress to ignore Wall Street lobbyists and to do what is in society’s best interest. There was a financial crisis that is still limiting our economic growth, after throwing us into the greatest recession since the great depression. Senator Franken is in a class of his own in Congress today. He is willing to take a stand and do what is in society’s best interest, which may not also be in the interest of his potential campaign contributions.
He took the lead on reforming the credit rating agencies, a major cause of the 2008 financial crisis. He took the lead and pushed the Chair of the SEC to end mandatory arbitration for brokerage accounts, “Franken, Dems tells SEC to end mandatory arbitration.”
The existence of mandatory arbitration is harming every American’s retirement nest egg. There is now more money in IRA’s than in 401k’s, yet the laws have not been revised since the advent of IRA’s over 40 years ago. The Investment Company Institute reported in its 2013 Annual Report that IRA assets now exceed $4.7 trillion dollars. Yet, the current laws favor Wall Street and encourage and allow an unprecedented abuse of American’s legal rights to due process. Every IRA that is opened up, is in a brokerage account that requires mandatory arbitration before a Wall Street kangaroo court, FINRA. (In Bed with Wall Street: The Conspiracy Crippling our Global Economy, by Larry Doyle, describes the damage FINRA is having on our society and its contribution to the 2008 financial crisis and limitation to any effective remedy for the harmed investor.)
Minnesotans Can Raise the Bar on Ending Regulatory Capture and Congressional Capture
So, Minnesotans, you have an election coming up in November. The Derivative Project urges you to move the debate away from traditional topics to the rights of every IRA investor to have access to the Federal courts in their IRAs (right of private action) and focus debate on a ban on mandatory arbitration in your IRA brokerage account agreement. Ask Senator Franken’s opponent, Minnesota businessman, Mike McFadden, Republican, what his stance is on banning mandatory arbitration in your IRA brokerage account agreement. Ask Mr. McFadden if he is in favor of ensuring the Department of Labor ERISA fiduciary standard for 401k’s should be extended to IRA’s, if not why not? The statement that an ERISA standard for IRAs “will harm the little guy, that cannot afford to pay a fiduciary advisor” has been neutered. The Derivative Project joined forces with Not On My Nickel and now anyone has access to the lowest cost, best performing fiduciary money managers, without a financial intermediary. They soon will have the tools and retirement platform that ends the “learned helplessness” rampant after 40 years of “financial education” provided by these conflicted intermediaries in workplace 401k/403B plans.
Regulatory Capture and the SEC:
This issue goes beyond traditional party lines – every American believes they have a right to their day in court. The situation is unprecedented. An IRA investor, as outlined in this Petition for Rule Change, (scroll to April 3, 2012) to the SEC, does not have any legal due process.
Here is more background on the issue at The Derivative Project and our Blog. ( We apologize for many poor links- much copy was lost due to Go Daddy’s poor export of four years of content from their Blogging service that was discontinued without adequate notice to their blogging customers. Best to not buy Go Daddy on their upcoming IPO until they help their customers who lost years of blogging content due to Go Daddy’s failed exports.–which is perhaps another Net Neutrality issue for Senator Franken to investigate.)
The SEC has not responded to Senator Franken’s request to ban mandatory arbitration to protect our legal rights. It is indeed a 2014 election issue, not just in Minnesota, but in every state.