In a world of populist leaders and half-baked 140-character-thoughts, a sober, law and constitution-focused judiciary, is critical in checking abuse of power. Relentless efforts to block the long-delayed fiduciary standard for those giving retirement advice is classic.
Inspired by President Trump’s recent memo to the Department of Labor to review and possibly rescind its incoming fiduciary rule, financial trade groups brought yet another application to the courts seeking to overturn it. Fortunately, Chief Judge Barbara Lynn for the U.S. District Court for the Northern District of Texas was there to hear and reject their arguments. This marked the second time that the federal district court has upheld the fiduciary rule. A third court, rejected an earlier effort to stay its implementation.
Judges and lawyers know all about fiduciary duty, it is a legal standard that was established by the courts of equity in hearing thousands of abuse of trust cases over centuries. Only those enriched selling risk to others and calling it ‘advice’ in name only, would argue against the obvious need to put the client’s financial interests before the seller’s profits. But unfortunately, the sales force remains fully in charge of governments at this point.
This was confirmed last week by ex-Goldman Sachs head Gary Cohn–now Trump’s new National Economic Council Director– who said, apparently without any embarrassment:
“We think it is a bad rule. It is a bad rule for consumers, this is like putting only healthy food on the menu, because unhealthy food tastes good but you still shouldn’t eat it because you might die younger.”
Good one. Yep, predatory, destructive financial products and advice do sometimes kill people via heightened stress, trauma and harm to health, but more often they just destroy peace, stability, families and happiness while undermining the financial strength of a nation and the world. No big deal, right?
We are living today through the carnage this sales-based, responsibility-free system has wrought. And we will be paying the price for the deficits and debts it’s created for years to come. It will require a strong judiciary as well as public revulsion to finally push the self-serving financial cartel back in service to the economy, rather than the other way around. A fiduciary standard and personal accountability are foundational to recovery.