Brookings Institution economist resigns following questions from Elizabeth Warren

[portlander23]

The Hill: Top Brookings economist forced out over biz-backed study

Robert Litan, Brookings’ nonresident senior economics fellow, will formally submit his resignation Tuesday afternoon, according to three sources familiar with the issue.

Warren sent a letter to Brookings earlier Tuesday suggesting that Litan used his Brookings affiliation to peddle an industry-backed study that's critical of the administration's proposed regulations for financial advisers. Industry groups, congressional Republicans and roughly 100 congressional Democrats oppose the so-called fiduciary rule, which is championed by Warren and President Obama.

"I am concerned about financial conflicts of interest in a recent study authored by [Litan]," Warren wrote in the letter to Brookings President Strobe Talbott.

Litan's resignation has already ignited a firestorm within the financial services industry over what has become a contentious policy fight over Obama's proposal to tamp down on financial advisers.

Warren's letter comes as Democratic support for Obama's regulatory proposal has deteriorated in recent weeks.

Last week, 96 House Democrats signed onto a letter calling on Department of Labor officials and Obama to significantly change the proposal, citing concerns that it would end up raising financial advice costs on low- and moderate-income Americans.

Obama and Warren have pushed for new disclosure requirements to ensure that consumers understand that their financial advisers might receive payments financial institutions after selling them advice.

[daleanime]

1. 96 House Democrats.....

changes need to be made.

[Enthusiast]

10. Precisely.

[wolfie001]

22. Maybe they're susceptible to $10,000 contributions

Talk is cheap and so are these fake DINOs.

[valerief]

38. 96 DINOs. nt

[octoberlib]

2. Why should ANY Democrats be opposed to disclosure requirements?

"Last week, 96 House Democrats signed onto a letter calling on Department of Labor officials and Obama to significantly change the proposal, citing concerns that it would end up raising financial advice costs on low- and moderate-income Americans."



They sound like Republicans.

[merrily]

8. $

[MisterP]

17. they're part of a "political class" whose purpose is circulation first, donors' bills second, votes

third (not that that'll stop them from blaming the voters for any of the commoners' complaints), bills we need fourth (if at all, since it endangers #1 and 2)

think tanks are a core part of keeping things as they are, relying on billion-dollar campaigns like the professional pollsters, speechwriters, spin doctors, poll-massagers (masseurs?), million-dollar ads

[bobalew]

23. Well, You find me a Poor, or lower middle class client that actually can AFFORD a financial Adviser?

And I'll sign on to this complaint.
Well, I'm waiting...
Crickets...
Thought so. What total B$...
Protect the rich, at ALL COSTS..

[PADemD]

3. Names at Link

http://thehill.com/policy/finance/254860-dems-rise-against-obamas-financial-adviser-regs

[Scruffy1]

4. I knew I'd find Colin Peterson's name there, but some others surprise me.

This whole financial adviser scam needs to go away in my opinion. They are just salesmen. Calling them "financial advisers" just leads to too much trust. A friend just had his life savings stolen by one. Now he's facing to have to find income after retirement.

[Marty McGraw]

7. Same with Juan Vargas

Remembered when that Scuz voted down the Move for California to go Single Payer when it was up for a Vote shortly following the Time when States could come out with their own Better Solution of the ACA

[Dustlawyer]

40. Merrill Lynch "lost" a chunk of my parent's savings before they took out the rest even though the

markets were setting record highs. They fleece the small individual investors on purpose, it's a rigged game!

[merrily]

9. some from Massachusetts. That's unsettling. Even more unsettling. Capuano was a signatory.

I tend to use him as my compass. My own Rep, who is much more rightist than Capuano, is not on there, though.

I don't get it, unless it's kabuki of some kind.

[djean111]

11. No surprise to me to see Patrick Murphy and Gwen Graham on there - DINOs.

No votes for them whenever the opportunity presents itself. No support either.
I wonder how the membership of the New Democrat Coalition lines up against the signatures.

[JDPriestly]

5. This provision and the imposition of a fiduciary duty on financial advisers is absolutely necessary.

Thank you, Elizabeth Warren and President Obama.

[Manifestor_of_Light]

6. Then they could be sued for breach of fiduciary duty, which would be an improvement.

[Fairgo]

12. The razor of truth

is cold and sharp.

[RiverLover]

13. I did a search before posting my OP about this...totally missed it.

ah well

Its an important story.

[yardwork]

14. Good.

[99th_Monkey]

15. K&R -nt-

[ancianita]

16. She should have that effect on all these foundation and Wall St. propaganda peddlers.

[progressoid]

18. This is why she should stay in the Senate.

I know people want her on the VP ticket but we need her kicking asses in Congress.

[hifiguy]

19. I am inclined to agree.

She is unquestionably a worthy successor to Ted.

[truebluegreen]

27. Treasury Secretary could be fun, or Fed chairman...

heh.

But yes, otherwise she should stay in the Senate.

[Elwood P Dowd]

20. There are a couple of posters supporting TPP and other fake free trade deals always

touting Brookings Institute economists. Wonder where those posters work and who butters their bread?

[Rex]

21. There will be some here that ignore this thread at all costs.

It might mess with their DC Bubble delusions. You would think any person with a moral compass would be FOR rules on conflict of interest.

Some here only care about money and are DINOs.

[Elwood P Dowd]

24. The DINO Bubble crowd will defend failed economic and trade policies 'til their dying breath.

Its like a religion with them.

[Rex]

25. I agree and it is very unhealthy toward the rest of us that are forced to live in reality.

Their love of money is a sickness imo.

[Hoyt]

28. Well, I'm sure Brookings would be glad for a liberal such as you to finance their studies.

You gonna pay. I doubt it, nor is Warren or Sanders.

I do expect objectivity, but if financing by a corporation is the only way to get an important study done, I'm fine with it. Might not agree with the conclusions, but I don't agree with everything Sanders or Warren say either.

As to this issue, I do believe there should be disclosure, giving the small investor the choice of paying the advisor on a fee only basis, or letting them make something for their work off the mutual fund or whatever.

According to an opinion article in the NY Times, these arrangements shave off about 1% from total returns to an investor. I suspect if the advisor were working strictly off a percentage fee only arrange, it would be that or perhaps more. That is supposedly what the Brookings' economist found. So I'm not sure the results are as bad as some think. In any event, I think an investor -- particularly small ones -- should be informed plainly and given a choice.

http://www.nytimes.com/2015/09/30/opinion/is-your-financial-adviser-making-money-off-your-bad-investments.html?_r=0

Basically, if you go to financial advisor, and they don't charge you for their work, it should be darn clear they are making some money elsewhere (off the investments they sell). Don't know many people who work for free, including Sanders and Warren.

[Rex]

30. Sadz?

[Elwood P Dowd]

33. Surprised he didn't go all out and call us "liberal extremists".

[Hoyt]

34. Nope. But, I do think you two are not very perceptive.

[Rex]

35. Well I think you are very myopic yourself there.

Since people have to contantly correct your posts and yet you still ignore them year after year as if they never said anything to you at all.

Ever been wrong about anything?

[DocMac]

37. As a long time reader of DU,

I am disappointed with your position on a few issues. Don't respond, just know how close you are to my ignore list, if it even matters to you.

[Rex]

36. Oh if ONLY certain crew members here had the conviction to say what they are thinking!

Okay true, they would get shitcanned within a few minutes...but still! You know they have to bite their tongue on a regular posting basis.

[spooky3]

39. That's 1% PER YEAR -- did you miss this sentence from the article you cited?

"This may not seem like a lot, but it adds up: Over 35 years, a one percentage point lower annual return can reduce your nest egg by more than 25 percent."

I do agree with you that there is no free lunch and that disclosure is critical. Financial advice isn't free, so if the adviser is not getting a % of your assets, then s/he will charge a fee or make money some other way.

[Eleanors38]

42. Brookings: Who corp centrists and MSM invite to the party to be fair & balanced.

[TrollBuster9090]

26. AAAAAAAAAAAAAaaaaaaaaaaaaaaarrrrrrrrrrrrrrrrgggggghhhhhhhhhh!

This whole issue makes my blood boil!

Why should passing a law that requires that financial advisers DISCLOSE to their clients when they may have a CONFLICT OF INTEREST when they give them financial advice be "controversial?" And why on earth should having to disclose (and there for STOP having) conflicts of interest with your clients cause financial advisers to raise their rates?

Is the argument that financial advisers will have to charge their clients more for their advice if they're prevented from taking backdoor bribes from brokerage houses to tell their clients to invest in things that ARE NOT in their best interests? SERIOUSLY?!

If this law had existed prior to 2008, THERE WOULD HAVE BEEN NO CRASH! Because financial 'advisers' would not have been able to advise their clients to buy things they KNEW were crap!

As just a small example, when Goldman Sachs was telling their clients to buy TIMBERWOLF (ie-the SHITTY DEAL), they would have been required to tell their clients "I'm advising YOU to buy this because the value may go up, but the law requires me to advise you that GOLDMAN SACHS is betting AGAINST Temberwolf, by short selling it, and we stand to make a shitload of money if the value DROPS. So...er...are you interested?"

[MADem]

29. I am so glad that this issue has come to the fore.

I know someone who was victimized by shitty advice and lost his pension because of it.

[Rex]

31. Another reason Warren needs to stay in Congress.

I'm glad most of the pleading for her to run has died off. We need her in Congress now more than ever imo.

[MADem]

32. Well, her latest foray at the Kennedy Institute re-fired the kiln, as it were.

She certainly said a lot of what needs to be said to a sector of the party that, up to now, hasn't been getting it (and we've seen a shitload of that here on this board). Not sure if she's just articulating in general, or hammering down a platform plank, or something else. Good speech anyway. I was delighted to hear this:

https://www.youtube.com/watch?t=1&v=IPEDI2hR0dM

[Ducksworthy]

41. Turtles all the way down

Corruption, where does it begin? It doesn't. Its like the cosmos, turtles all the way down.