Executive order puts retirement security at risk for some

After meeting with a dozen chief executives of hedge funds and banks, President Trump on February 3 signed two executive orders that Wall Street cheered.

The first one directs the Secretary of the Treasury to recommend a plan for dismantling the Dodd-Frank Wall Street Reform and Consumer Protection Act, which provides the public with some protections against the kinds of reckless speculation and fraud that caused the financial crisis of 2008.

The other effectively eliminates a regulation designed to protect retirees from predatory financial advice. The regulation being eliminated is known as the fiduciary rule, and it requires financial professionals giving retirement advice to act in their customers’ best interest.

“Donald Trump talked a big game about Wall Street during his campaign, but as President, we’re finding out whose side he’s really on,” said Senator Elizabeth Warren in a statement about the executive orders. “Today, after literally standing alongside big bank and hedge fund CEOs, he announced two new orders: one that will make it easier for investment advisers to cheat you out of your retirement savings, and another that will put two former Goldman Sachs executives in charge of gutting the rules that protect you from financial fraud and another economic meltdown. The Wall Street bankers and lobbyists whose greed and recklessness nearly destroyed this country may be toasting each other with champagne, but the American people have not forgotten the 2008 financial crisis, and they will not forget what happened today.”

Before the executive orders were signed, Sen. Warren issued a report on the pernicious practices of some financial professionals who put their own interests ahead of their customers.

According to the report, some agents who call themselves financial advisers routinely steer customers to invest their retirement savings in annuities and other financial instruments offered by companies that reward the advisers with kickbacks such as high fees, fancy vacations, and other incentives.

The Consumer Federation of America also has weighed in on the necessity of protecting retirees from so-called financial advisers who are in effect sales people with a vested interest in steering customers to companies that offer what amount to kickbacks for selling their products.

“Investors who unknowingly rely on biased salespeople as if they were trusted advisers can suffer real financial harm as a result. It is estimated, for example, that retirement savers lose $17 billion a year or more as the result of the excess costs associated just with conflicted retirement advice,” reads a report published by the federation.

Writing for Think Progress, Bryce Covert tells the story of one retiree who trusted a financial adviser with his retirement savings and ended up getting burned.

Phillip Burns, writes Covert, was offered a buyout to retire from his employer. Burns sought financial advice from an agent who said Burns could get rich by investing his $355,000 in a variable annuity.

But the agent didn’t tell Burns that she received commissions from the seller of the variable annuity or that the commissions she received from the annuity company and others totaled $900,000 a year.

The variable annuity that Burns purchased was in fact a risky investment that ended up losing most of its value and costing Burns his retirement security.

Thanks to the work that Sen. Warren had done to shine a light on the kickbacks and other incentives that so-called financial advisers receive from annuity companies and other financial institutions, the Labor Department drafted the fiduciary rule to protect retirees and their retirement security.

After the long vetting process required to enact such regulations, the fiduciary rule was set to go into effect in April; however, President Trump’s executive order indefinitely delays its implementation and instructs the new secretary of labor to review the rule, which means that there is no chance that the fiduciary rule will be implemented.

While Wall Street seemed pleased with the rollback of the fiduciary rule, others were wary of the consequences.

“For many Americans, today’s executive order means they will continue to get conflicted financial advice that costs more and reduces what they are able to save for retirement,” said Nancy LeaMond, executive vice president of the American Association of Retired People to Business Insider.

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Supporters of Nissan workers: “Worker rights are civil rights”

A group that included civil rights activists, clergy, local elected officials, union members and leaders, and students on January 26 demonstrated outside of a Nashville Nissan dealership to protest civil rights violations at the Nissan factory in Canton, Mississippi.

“We are proud to stand with our friends in Mississippi to call attention to civil rights abuses at Nissan’s assembly plants,” said the Rev. Ed Thompson, chair of Nashville Organized for Action and Hope (NOAH), a coalition of faith leaders, community organizations, and labor unions. “We believe workers’ rights are civil rights. We’re asking Nissan to do better by its hard-working employees, and we’re asking Nissan’s dealers and customers to join us in this cause.”

The Nashville demonstration was the first of a series of planned actions being taken to raise awareness of troubling conditions at Nissan’s Canton factory, which manufactures several Nissan models including the Altima, Frontier, Murano, and Titan.

Workers at the Canton Nissan factory have become concerned about safety at the factory, a punishing production quota that exacerbates safety problems, a two-tiered wage system that pays temporary workers much less and provides fewer benefit than permanent workers, and the company’s campaign of coercion and intimidation directed at workers who want to form a union.

Workers who have been trying to form a union local of the United Autoworkers (UAW) have seen their safety deteriorate since the plant was opened in 2003.

“People get hurt too often at Nissan and these injuries can rob us of our ability to provide for our families,” said Ernest Whitfield, a 13-year Nissan employee in Canton who attended the Nashville demonstration. “We’re forced to decide if we should work with an injury, or report it and potentially lose our jobs. It strips away your dignity to feel like the company values production numbers more than the safety of the people who make it successful.”

The US Occupational Safety and Health Administration (OSHA) in July fined Nissan for safety violations at the Canton plant that that caused serious injuries to two workers. According to OSHA, both workers were hospitalized because of falls caused by slip hazards that the company failed to correct. One fall happened in October 2015; the other in February 2016.

At the Nashville demonstration, a delegation delivered a letter to the dealership’s owner from the Mississippi Alliance for Fairness at Nissan (MAFFAN), a civil rights coalition supporting the Canton Nissan workers.

The letter, signed by Dr. Isiac Jackson, president of the General Missionary Baptist State Convention of Mississippi and chairman of MAFFAN, says that despite promises that Nissan would “bring quality jobs to our community for years to come, over time, Nissan has decided to take a different path. Today, the company exploits its predominately African American workforce in a number of ways.”

Speaking at the Nashville demonstration, Vonda McDaniel, president of the local labor council, criticized Nissan for the disparity between what it says are its values and the way that it conducts itself at the Canton plant.

“Nissan spends hundreds of millions of dollars a year marketing itself as a socially responsible car maker,” said McDaniel.. “But the reality is, Nissan is turning a blind eye toward workers’ rights and safety problems at its assembly plants. It’s time for Nissan dealers and customers to recognize that what they’re selling and buying just doesn’t fit the image of what Nissan claims it’s producing.”

Similar demonstrations are planned for Nissan dealerships in Atlanta, Birmingham, Alabama, Charlotte, North Carolina, Greensboro, North Carolina, New Orleans, and Raleigh, North Carolina.