Joe Biden just handed a huge win to fat-cat bankers and threw American retirement savings to the wolves. He fought the idea hard on the campaign trail but couldn’t wait to cave in quietly, as soon as nobody was looking. Now, he’s the one putting the “interests of Wall Street” ahead of Americans.
Biden backed down
Joe Biden fought fiercely against the idea of allowing private equity donors to charge fees from 401(k) retirement accounts when it was a Trump administration idea, calling it “another example of President Trump putting the interests of Wall Street ahead of American workers and families.” While campaigning, he “denounced the stealth executive action and promised to oppose such changes.”
His exact words were that he “staunchly opposes regulatory changes that will lead to skyrocketing fees and diminished retirement security for savers.” He already caved in. Now that it’s a socialist wealth sharing scheme, he’s all for it, “delivering a gift to the Democrat’s own finance industry sponsors, even as federal law enforcement officials are warning of rampant malfeasance in the private equity industry.”
In 2020, when the Labor Department issued a ruling where they “authorized retirement plan administrators to shift workers’ savings into high-risk, high-fee private equity investments,” Biden denounced it. That’s something which regulators thought was prevented by law.
Laws today aren’t the firm and unyielding things they once were. Now they’re flexible as rubber and can be twisted to-and-fro whichever way the wind blows. Shoplifting used to be a crime, for instance. Labor Department administrators decided to “reinterpret” things in their favor, calling it a way to “help Americans saving for retirement gain access to alternative investments that often provide strong returns.”
Blackstone Group CEO Stephen Schwarzman was drooling all over his shoes when he heard the news. He got his hands on a fortune with one single stroke of the pen. “Accessing the $7 trillion in Americans’ 401(k) was one of his company’s top goals.” Under the new way of looking at the problem, Biden administration regulators have a few warnings about using the loophole but they haven’t pulled it closed.
They recommend that the practice be left to the experts. The written decision “explicitly affirms” that retirement administrators with “experience evaluating private equity investments” could be the best “suited to analyze these investments for a (401k) plan, particularly with the assistance of a qualified fiduciary investment adviser.”
A stronger statement
Eileen Appelbaum, with the Center for Economic and Policy Research is more than a little upset.
Joe Biden and his Department of Labor “could have and should have made a stronger statement about the unsuitability of private equity products for workers’ defined contribution retirement savings and the inability of nearly all brokers to evaluate private equity products,” she declares.
Meanwhile, the U.S. Supreme Court made it crystal clear that 401(k) holders can sue the pants off “finance executives that invest their savings in inappropriately risky or predatory private equity investments.”
That was just the safety net which Biden needed and labor officials “effectively blessed such investment strategies.” They’re already breaking out the Champaign on Wall Street.
“Industry lawyers and investment executives are already celebrating the letter as a precedent setting ruling potentially opening trillions of dollars of Americans’ retirement savings up to higher-fee investments.”
“We believe this is a settled matter now,” a finance executive at Switzerland-based Partners Group gloats. It’s interesting that the Biden campaign “raked in more than $3.8 million from donors at private equity and investment firms, according to OpenSecrets.“