Elizabeth Warren is Not Impressed with Your Diamond-Encrusted Ring
Senator Warren blasts kickbacks for brokers and subtly shames five of her fellow Senate Democrats.
Since her arrival at the United States Senate, Elizabeth Warren has broken many unspoken rules of Congress. She’s called out members of her own party’s Administration — lambasting regulators for not bringing cases against bankers. She’s joined Senator Sherrod Brown to call out President Obama on the secrecy of the Trans-Pacific Partnership (TPP) trade agreement. And now, Senator Warren is also using her substantial megaphone to send some not-so-subtle messages to her fellow Democrats in the Senate.
In February, President Obama backed a new Department of Labor proposal to help end the conflicts of interest present in some retirement brokers’ advice to clients. The idea is to require all retirement advisers to act in their customers’ best interests — something some retirement advisors are not required to do today. But not everyone in the Democratic party stands behind the proposal, despite the fact that such biased advice costs Americans an estimated $17 billion a year. This week, Senator Warren used her platform to publicly shame both the companies that give their brokers kickbacks for conflicted advice, and the Democratic Senators defending them.
Bloomberg News reported that five Democratic Senators met with Department of Labor Secretary Tom Perez to argue against the conflict-of-interest rule. Present at the meeting were Senators John Tester (D-MT), Ben Cardin (D-MD), Joe Manchin (D-WV), Joe Donnelly (D-IN) and Gary Peters (D-MI). But while these Democrats are hauling Secretary Perez up to the Hill to castigate him about a rule that would help Americans save more for retirement, Warren is using her pulpit to undermine their opposition.
This week, Senator Warren blasted the insurance industry for the perks they give their annuities salespeople for peddling conflicted advice. Warren wrote in a statement that these “questionable practices” highlight the need for the very rule her five Senate colleagues are lobbying against. And she also sent 15 letters to annuity providers like Allianz and AIG, asking the companies for information about the rewards they offered to their brokers.
She didn’t stop there. In a Senate Banking Committee hearing on April 28, Senator Warren called out some of the luxurious kickbacks:
“I got interested in what kinds of kickbacks some of these insurance salesman were getting when they pushed people to buy annuities. And what I found is pretty amazing.
I found free cruises luxury vacations at five-star resorts, an African Safari, private yacht tours of the Mediterranean, iPads, Mercedes-Benz leases, and — get this one — a diamond encrusted, NFL Superbowl style ring with a large ruby in the middle.”
While Senator Warren doesn’t mention her Democratic colleagues that have pushed back on the Labor Department’s proposal by name, her obsessive focus on the glitzy rewards the rule would prevent don’t make them look very good, either.
In her letter to the insurance companies, Senator Warren wrote that those selling annuities were “more interested in earning perks than in acting in their clients’ best interest” and that this conflict places Americans’ “retirement security at risk.” The clear implication of her messaging is this — either you stand with efforts to protect Americans saving for retirement from conflicts, or you stand with the annuity providers who are making it rain diamonds, luxury vacations, and gold watches on their brokers, as American’s retirement savers pick up the tab.
Alexis Goldstein used to work on Wall Street, and now writes about financial reform. Find more of my work at Medium, Twitter, FinanceIsBoring.com or alexisgo.com.
