Advertisement

Trump adviser likens new rule protecting retirees to discrimination against slaves

“We’re going to repeal it,” he promised.

Trump economic adviser Anthony Scaramucci. CREDIT: AP Photo/Richard Drew
Trump economic adviser Anthony Scaramucci. CREDIT: AP Photo/Richard Drew

Until recently, financial advisers who helped clients decide where to invest their retirement money were legally able to steer them toward products that made themselves money at their clients’ expense. That should soon change, thanks to a new rule from the Department of Labor finalized in April that will require these brokers to adhere to a fiduciary standard and to always put clients’ interests ahead of their own.

But an economic adviser to Republican presidential nominee Donald Trump is already promising to roll that rule back.

Anthony Scaramucci, who is also founder of financial firm SkyBridge Capital, told Mark Schoeff Jr. of InvestmentNews, “We’re going to repeal it,” adding, “It could be the dumbest decision to come out of the U.S. government in the last 50 to 60 years.”

Scaramucci went even further, likening the new rule to an infamous 1857 Supreme Court decision that denied citizenship to all slaves and their descendants. “It’s about like the Dred Scott decision,” he said.

Advertisement

In a follow up email, he explained that he thinks the analogy is fitting. “The left-leaning Department of Labor has made a decision to discriminate against a class of people who they deem to be adding no value,” he said, referring to retirement brokers. “They are judging what should happen in a free market and attempting to put financial advisers out of work.”

The Supreme Court ruling found that Dred Scott, a black slave, had no standing to sue for his freedom because he was not a citizen. It also held that all people of African ancestry, both enslaved and free and even those born in the United States, could never become citizens. It was explicitly repudiated with the addition of the Fourteenth Amendment to the U.S. Constitution, which guarantees birthright citizenship.

The rule change that Scaramucci likens to this case is meant to address a crisis facing many retirees. There has been a huge shift away from guaranteed pension payments to the use of 401(k) retirement plans that require individual employees to make smart investment decisions. Without the new fiduciary duty rule, many of them were being steered into products that made their advisers money but weren’t the best choice, costing them an estimated $17 billion a year.

Today’s retirees can little afford that kind of cost. About a third of working age people have less than $1,000 saved up for their golden years, while more than half have nothing at all.

Republicans have been staunchly opposed to the new rule, however. Shortly after it was finalized, House Republicans voted to block it, claiming the rule will make retirement advice less affordable and calling it government overreach. That position lines up directly with the financial industry, which sent a letter urging lawmakers to vote yes on the resolution.

Advertisement

Trump has claimed that Democratic rival Hillary Clinton is “owned” by Wall Street. Yet repealing the fiduciary duty rule is not the only way that he would give the industry what it wants. Trump has promised to dismantle the Dodd-Frank financial reform legislation meant to rein banks in and said he will ban all new banking regulations.