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A couple of years ago my husband and I took over the care of an incapacitated elderly relative. What we found when we began to examine her business affairs horrified us. She had been solicited by one of the “vice-presidents” of her long-time bank to make several high-risk investments with the nest-egg her husband had left her. It gets worse: we found that not only were her funds invested in the type of high-risk implements that no one of her age should be dabbling in, but that they were likely being “churned” – that is, being traded monthly by the broker in order to generate regular commissions from the trades. Needless to say, her investments were losing money regularly, mostly to commissions.

Get the picture? An elderly, cognitively impaired widow was flim-flammed by people she trusted and looked up to. She had been flattered by the attention from her banker and insisted that such an important person would never have taken advantage of her. To cap it all off, we found that the bank had secured her signature on a document certifying that she fully understood the risky nature of the investments made in her name. I can assure you that this is a woman who had never bothered to learn how to read her banking statement – her husband did all that “boring stuff” – and at the time the document was signed, she was unable to decipher her telephone bill.

So you can understand why I was so delighted to learn that the President is proposing to tighten the fiduciary rules that govern brokers and investment advisers. The goal is to crack down on bad actors who take advantage of their role as a knowledgeable and trusted adviser in a complex and arcane discipline to serve their own interest rather than their clients. A report (pdf) from the Council of Economic Advisers estimates that retirees are defrauded of $17 billion a year by unscrupulous advisers who fail to disclose conflicts of interest or the hidden fees they are charging the unwary. My family is not alone in being victimized by rapacious financial advisers.

But my joy is not unmitigated. My own  congressional representative, Rep. Ann Wagner (R-2), has gone on the warpath against the new rules – or rather she’s been on the warpath against the possibility of such rules emanating from the Securities and Exchange Commission (SEC) per the provisions of the Dodd-Frank Act for a long time before the President acted. In response to the President’s announcement, she introduced legislation to stymie the new rules:

On Wednesday, Rep. Ann Wagner, R-Mo., introduced a bill that would force the DOL to wait until after the Securities and Exchange Commission has acted on a similar fiduciary rule it is considering for retail investment advice. The SEC has circled such a regulation for years and is not close to making a proposal.

In an interview, Ms. Wagner said she moved up the introduction of her bill to respond to Mr. Obama, who spoke at AARP on Monday supporting DOL’s efforts, and Sen. Elizabeth Warren, D-Mass., who appeared at the event to endorse the proposal.

Wagner’s legislation is essentially the same as a bill she introduced in 2013 which passed the House only to be allowed to die a merciful death in the Senate. At the time I described her legislative efforts thusly:

Wagner is the author of the latest manifestation of Republican disdain for Dodd-Frank, the misnamed Retail Investor Protection Act (H.R. 2374) which just passed the House. Wagner’s bill “tweaks” Dodd-Frank in such a way that it curtails the ability of the Securities and Exchange Commission (SEC) and the Department of Labor (DOL) to make rules that protect investors:


This proposed change has not only roused managers of 401(k) funds, but consumer advocates who are concerned that it could stop any regulation of investment brokers who have long been free to run amok. In addition to the groups mentioned above, others such as the Chair of the SEC, the AARP, the Investment Adviser Association, and the North American Security Administrators Association have also lobbied vociferously against the Wagner bill, asserting that it “imposes unnecessary and onerous rulemaking requirements that the Securities and Exchange Commission (SEC) must meet before it can adopt a fiduciary rule” which “not only unnecessarily slows DOL’s rulemaking, but […] potentially halts DOL’s rulemaking altogether if the SEC does not act on a fiduciary rule.”

Wagner’s rationale now as earlier echoes the reflexive response of the financial industry – which is the same weak tea they serve up about any effort to regulate the wild and crazy crew running our financial institutions: regulations raise costs, poor folks will be unable to afford investment advisers, yada, yada … .

The St. Louis Post-Dispatch’s David Nicklaus, who isn’t especially enamoured with financial populism, gives such arguments short shrift:

If that’s the best defense the industry can muster, it’s on pretty shaky ground.

For one thing, it’s not clear that costly, conflicted advice is better than none at all. […]

Secondly, individuals can find sources of unbiased, low-cost advice. …

Nicklaus not only gets it right, he doesn’t even have to strain to do so. And if you want a less academic perspective, I’ve told you what lack of appropriate financial regulation cost a vulnerable member of my own family.

Which brings us to the real question. Why is Ann Wagner trying so hard to carry water for the financial vultures? Why has she made it her raison d’etre to act as a hand-maiden for the guys who make the big bucks by, among other things, cheating elderly women? Do you think it might have something to do with the fact that she gets the biggest amount of her own campaign big bucks from banks and securities and investment firms? Or do rich folks just tend to stick together? At any rate, Rep. Ann Wagner is certifiably Wall Street’s gal in Washington.