Perhaps you’ve seen the commercials that run from time to time on television regarding a rather obscure subject to most of us: the Conflict of Interest rule.
Simply put, this new rule requires that investment advisers act in the best interest of their clients instead of their own. Makes sense, doesn’t it, but the insurance and investment companies affected by the new regulation are now screaming bloody murder and saying the rule is going to lead to the downfall of the entire market.
That just happens to be a gigantic honking lie neatly wrapped in bullcrap.
Also, while these huge companies are out screaming to consumers and Congress how the Conflict of Interest rule means they’re doomed, Senator Elizabeth Warren and Congressman Elijah Cummings happened upon some fascinating information showing that those very same companies are telling their shareholders just the opposite.
According to a letter sent by Warren and Cummings to the Secretary of Labor, Thomas Perez, the new rule is not a problem at all. The Labor Department, it should be noted, will be responsible for enforcing the new regulation, and Warren does not mince words in the letter to Secretary Perez:
“In contrast to their public doomsday predictions, industry leaders have told their own investors that they ‘don’t see this as a significant hurdle,’ ‘will once again respond to marketplace or regulatory changes effectively,’ and that they are well-positioned to ‘adapt to any regulatory framework that emerges.'”
In other words, despite their protestations, these finance and insurance companies are busted by their own words.
The new rule is needed because far too many investment advisers attempt to steer their clients which will earn them the most commission, and to hell with the investor if he or she loses a bundle as a result.
Also noted in the letter are phone calls made by major companies such as Prudential and Transamerica asserting that the new rule is no problem for them to adapt to while those same firms were in front of Congress doing their sadsack routine and asking for delays in implementing the Conflict of Interest rule.
Some things never seem to change: the same banks, investment firms, and insurance companies that very nearly wrecked the American economy in 2008 are now whining because they have to be honest with their clients instead of padding their own nests.
Here’s Senator Warren questioning Secretary Perez late last year on the new regulation: