Elizabeth Warren's Big Win: The New, Much-Needed Rule That Could Rein in Wall Street

By Andrew Burstein and Nancy Isenberg, Salon

24 April 16

A new Labor Department requirement is giant victory for consumer advocates over Wall Street and financial advisers

re you in the market for some good news? While everyone is being told to follow the excitement of the 2016 campaign to the exclusion of all else, out of the spotlight but not far away, the Obama administration is calmly trying to enact lasting progressive change. In the Labor Department earlier this month, consumer advocates won a big battle, as the vast middle class was “gifted” with a new requirement being placed on the financial services industry. As Massachusetts Sen. Elizabeth Warren explained, a glaring conflict of interest has been resolved in the favor of people saving for retirement. No longer can investment advisers recommend funds to their clients that reward them or their firms; instead, they must, without exception, direct customers into the best financial products, with lower or, sometimes, zero fees.

In her inimitable style, Warren crowed: “No more pushing products that generate financial benefits for advisers, while draining the customer’s savings.” It’s a very simple principle: “No more free vacations, cars, bonuses, fees, and other kickbacks.” Her mantra, as we know, is fairness. Her legislative agenda is to introduce new legal protections for consumers. She is quick to point out that most financial advisers are ethical, and work hard to help their clients. But these individuals have, for many years, been forced to compete with “slick-talking” advisers whose recommendations reflect personal incentives and produce “terrible results” for middle-class savers, amounting, the Labor Department says, to many billions of dollars.

Firms must now make a full disclosure. Facing the music, the largest independent company that manages retirement savings, with $450 billion in retirement assets, right away cut account fees for investors by “up to 30 percent.” Retirees win. The system can adapt. As Warren stated: “Americans are tired of a Washington that works great for the big guys and doesn’t work for anyone else.”

You know who she sounds like? Frances Perkins, Franklin D. Roosevelt’s secretary of labor for the entirety of his presidency, and the first female cabinet member in U.S. history. She should never be forgotten. Having personally witnessed the Shirtwaist Triangle fire of 1911, a tragedy in New York’s Greenwich Village that took the lives of 146 garment workers, a young and inspired Fannie Perkins resolved to devote herself to the cause of the American worker. As the accomplished business journalist Kirstin Downey lays out in her 2009 biography, Perkins pushed constantly for child labor laws, for safety regulations and a host of other fair labor practices. To prevent workers from descending into poverty, she urged compensation for workplace injury; she saw to the imposition of a minimum wage for the first time–which in the mid-1930s was around 45 cents an hour–and she pioneered unemployment insurance as we know it.

As compellingly up-front, if perhaps less pleasantly in-your-face than Warren is, Perkins told FDR when he was president-elect to think twice about naming her to the cabinet: “If you don’t want these things done…, I’d be an embarrassment to you.” She fed public demand. Fortunately for Roosevelt’s own historical reputation, he was not afraid of a strong woman. It is arguable that, were it not for Secretary Perkins, Social Security would never have happened.

At the same event at which Warren spoke, Sen. Cory Booker put in his own two cents when it came to the resistance of established financial firms to the “best interest standard” that the DOL has given life to. The New Jersey senator called the previous system that for so long “bilked” investors of their retirement saving “an assault on the ideals of this country.” Under the old rules, brokers only had to honor a level of ethical performance that was euphemistically called a “suitability standard,” and Republicans predictably complained that the Obama administration was trying to place “an undue burden” on finance professionals. Booker, like Warren, would have none of that. “We’re not surrendering to cynicism in this country,” he challenged.

With many billions of dollars now saved through the new requirement on financial advisers, we should all be giving renewed attention to the fight for a fairer minimum wage. California and New York have announced a raise from the current federal minimum of $7.25/hour to $15.00/hour. Los Angeles mayor Eric Garcetti explained the common-sense thinking that went into the decision: “Poverty is bad for business.” CEOs and small business owners alike, he said, “understand the impact economic justice can have on the workforce and the local economy—better paid employees are more likely to stay on the job, and when folks have more money in their pockets, they spend it.”

Secretary of Labor Tom Perez, who previously led the Civil Rights Division of the Justice Department, has been acting in the best tradition of his hard-charging predecessor in standing up for the American worker and for all retirees. In fact, in his blog on the DOL website he states that a portrait of Frances Perkins hangs proudly above his desk. She brought about the Fair Labor Standard Act of 1938, which continues to set minimum wage and overtime pay standards. The old rationale that minimum-wage jobs are for teenagers, or a stepping-stone for adults, and therefore should not be tampered with too severely, is misleading. According to the Bureau of Labor Statistics, 80 percent of hourly wage workers are over age 25; and the Economic Policy Institute states that 26 percent of the workforce earns less that $10.55/hour. Of the 22.9 million American workers who stand to be affected by a prospective increase in the federal minimum wage, over 80 percent are at least 20 years old; one-quarter are either single parents or married parents. The emotional, as well as financial, health of families is at risk.

For quite some time, our flat minimum wage has not reflected gains in worker productivity. President Obama and Senator Warren have been pressing for an increase for three solid years now. The family values voters out there–that is, if we define “family values” the way it should be done–are clearly in favor of a sensible minimum wage hike. Warren tells the story of how, when she was 12, her father suffered a heart attack and her mother was forced to take a minimum-wage job at Sears; at that time, it was enough to save the family from losing their home.

For all kinds of reasons, Warren has been out on the front lines, constantly reminding all who will listen that we need watchdogs in government. And like Secretary Perkins before him, Perez is helping to realize the progressive reforms President Obama is intent on accomplishing in his final year in office. Booker said it best: “This fight ain’t over.”

Andrew Bacevich and America's Long Misguided War to Control the Greater Middle East

By Charles Glass, The Intercept

24 April 16

he convicition that invasion, bombing, and special forces benefit large swaths of the globe, while remaining consonant with a Platonic ideal of the national interest, runs deep in the American psyche. Like the poet Stevie Smith’s cat, the United States “likes to gallop about doing good.” The cat attacks and misses, sometimes injuring itself, but does not give up. It asks, as the U.S. should,

What’s the good
Of galloping about doing good
When angels stand in the path
And do not do as they should

Nothing undermines the American belief in military force. No matter how often its galloping about results in resentment and mayhem, the U.S. gets up again to do good elsewhere. Failure to improve life in Vietnam, Lebanon, Somalia, Iraq, Afghanistan, and Libya stiffens the resolve to get it right next time. This notion prevails among politicized elements of the officer corps; much of the media, whether nominally liberal or conservative; the foreign policy elite recycled quadrennially between corporation-endowed think tanks and government; and most politicians on the national stage. For them and the public they influence, the question is less whether to deploy force than when, where, and how.

Since 1979, when the Iranians overthrew the Shah and the Soviets invaded Afghanistan, the U.S. has concentrated its firepower in what former U.S. Army colonel Andrew Bacevich calls the “Greater Middle East.” The region comprises most of what America’s imperial predecessors, the British, called the Near and Middle East, a vast zone from Pakistan west to Morocco. In his new book, America’s War for the Greater Middle East, Bacevich writes, “From the end of World War II until 1980, virtually no American soldiers were killed in action while serving in that region. Within a decade, a great shift occurred. Since 1990, virtually no American soldiers have been killed anywhere except the Greater Middle East.” That observation alone might prompt a less propagandized electorate to rebel against leaders who perpetuate policies that, while killing and maiming American soldiers, devastate the societies they touch.

Bacevich describes a loyal cadre of intellectuals and pundits favoring war after war, laying the moral ground for invasions and excusing them when they go wrong. He notes that in 1975, when American imperium was collapsing in Indochina, the guardians of American exceptionalism renewed their case for preserving the U.S. as the exception to international law. An article by Robert Tucker in Commentary that year set the ball rolling with the proposition that “to insist that before using force one must exhaust all other remedies is little more than the functional equivalent of accepting chaos.” Another evangelist for military action, Miles Ignotus, wrote in Harper’s two months later that the U.S. with Israel’s help must prepare to seize Saudi Arabia’s oilfields. Miles Ignotus, Latin for “unknown soldier,” turned out to be the known civilian and Pentagon consultant Edward Luttwak. Luttwak urged a “revolution” in warfare doctrine toward “fast, light forces to penetrate the enemy’s vital centers” with Saudi Arabia a test case. The practical test would come, with results familiar to most of the world, 27 years later in Iraq.

The Pentagon, its pride and reputation wounded in Vietnam as surely as the bodies of 150,000 scarred American soldiers, was slow to take the hint. The end of compulsory military service robbed it of manpower for massive global intervention. Revelations of war crimes and political chicanery from the Senate’s Church Committee and the Pike Committee in the House added to public disenchantment with military adventures and intelligence meddling in other countries’ affairs. It would take years of effort to cure America of its “Vietnam Syndrome,” the preference for diplomatic before military solutions.

In the Middle East, President Gerald Ford saw no reason to rescind his predecessor’s policy, the Nixon Doctrine of reliance on local clients armed by the U.S. to protect Persian Gulf oil for America’s gas-hungry consumers. Nothing much happened, though, until one of the local gendarmes, the Shah of Iran, fell to a popular revolution and the Soviets invaded Afghanistan.

Change came with the Carter Doctrine, enunciated in the president’s January 1980 State of the Union address: “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and as such an assault will be repelled by any means necessary, including military force.”

Carter’s combative national security adviser, Zbigniew Brzezinski, wrote later, “The Carter Doctrine was modeled on the Truman Doctrine.” Bacevich comments that the Truman Doctrine of ostensibly containing the Soviet Union while absorbing the richer portions of the decolonizing French and British Empires “invited misinterpretation and misuse, with the Vietnam War one example of the consequences.” Carter’s doctrine, modified but not rescinded by his successors, led to similar consequences in Afghanistan and Iraq.

George W. Bush took the Carter Doctrine to fresh lengths when he made the case, prepared for him by national security adviser Condoleezza Rice, for preventive war in a speech at the U.S. Military Academy on June 1, 2002: “If we wait for threats to fully materialize, we will have waited too long.” Bacevich quotes the Nuremberg court’s view of preventive war: “To initiate a war of aggression is the supreme international crime differing only from other war crimes in that it contains within itself the accumulated evil of the whole.” After the failures to impose order in Afghanistan and Iraq, President Barack Obama rather than abandon the policy merely moved its emphasis from Iraq to Afghanistan without achieving any military or political objectives.

Bacevich, a West Point graduate and Vietnam veteran, while conceding his “undistinguished military career,” is more willing than most journalists to question the justice and utility of expanded military operations in the Middle East and to challenge the media-hyped reputations of some of America’s favorite generals, Stormin’ Norman Schwarzkopf, Colin Powell, Wesley Clark, and David Petraeus foremost. One general who comes out well in Bacevich’s assessment is British, Sir Michael Jackson, who resisted Wesley Clark’s order to block a runway at Pristina airport against Russian flights into Kosovo. His answer, worthy of Gen. Anthony McAuliffe’s reply of “Nuts” to the German demand for surrender at Bastogne: “Sir, I’m not starting World War III for you.”

This tour de force of a book covers the modern history of American warfare with sharp criticism of political decisions and rigorous analysis of battlefield strategy and tactics. As such, it should be required reading at the author’s alma mater. It would not hurt for those aspiring to succeed Barack Obama as commander-in-chief to dip into it as well. None of them, with the possible exception of Bernie Sanders, is likely to reject the worldview that led to so many deaths around the world. Watch for more military missions. Be prepared for more assassination by drone, of which even former Afghanistan commander Gen. Stanley McChrystal said, “They are hated on a visceral level, even by people who’ve never seen one or seen the effects of one.” McChrystal pointed out that drone strikes are great recruiters, not for the U.S. military, but for the Taliban, al Qaeda, and ISIS.

Ignoring Bacevich and heeding the call of the intellectual warmongers who guided Bush, Obama’s successor, like Stevie Smith’s cat, is likely “to go on being / A cat that likes to / Gallop about doing good,” expanding rather than limiting the projection of armed might into the Greater Middle East.