March 23, 2020
Permission to republish original opeds and cartoons granted.
SEC proposal breaks Trump regulatory pledge, places risk burden on brokers, not investors
President Donald Trump has
made ending overly paternalistic or downright economically damaging regulations
one of the xxxxxxs of his administration with a success record second to none
in rolling back the expanded administrative state. Yet, in spite of this
administration emphasis, the Securities and Exchange Commission is considering
an Obama era regulation which is so extreme that the former president’s own SEC
rejected moving forward with it. The regulation would deny independent
investors access to currently available trading alternatives designed to allow
them to hedge risks against market volatility unless they passed a test and
were deemed qualified by a financial services provider.
Senate Dems hold economy hostage after demanding everything close to slow down Chinese coronavirus
Senate Democrats are holding
the U.S. economy hostage after blocking legislation to protect small
businesses, guarantee payroll and expand unemployment relief to tens of
millions of workers. The vote failed 47 to 47, with 60 needed to advance the
bill.The fate of 30 million small businesses and critical industries, indeed,
the U.S. economy hangs in the balance after the federal and state governments
have practically closed everything except for essential services. The
government has put the economy into an induced coma, and now it has a
responsibility not to lose the patient. By forcing almost the entire population
to stay home for all intents and purposes, the government must ensure the
American people have an economy to go back to. Many of those businesses will
never come back—unless Congress acts right now to protect them. Here is the
truth. People are going to start running out of money very soon as cash
reserves are depleted. Without revenues, every aspect of the economy will seize
up. The only way to safely contain the virus is for Congress to incentivize the
American people to stay home. Or else people and businesses will begin breaking
the national lockdown out of desperation.
Senate Democrats must quit playing politics and get serious to protect 30 million small businesses
Americans for Limited Government
President Rick Manning: “While Americans for Limited Government is
uncomfortable with the amount of spending authorized, and the changes to the
unemployment laws that dramatically expand the program having the likely
unintended impact of encouraging businesses to lay off employees, rather than
fight through the crisis, it remains important Congress come together.
Democrats must stop their putting politics ahead of the lives and livelihoods
of the American people. America is the greatest country in the history of
mankind. We will survive this national challenge, and by passing legislation
providing a safety net to allow the small business foundation of our economy to
hit the ground running once we're past this crisis, we will come back rapidly
and stronger than ever.”
SEC proposal breaks Trump regulatory pledge, places risk burden on brokers, not investors
By Rick Manning
President Donald Trump has made ending overly paternalistic or downright economically damaging regulations one of the xxxxxxs of his administration with a success record second to none in rolling back the expanded administrative state. Yet, in spite of this administration emphasis, the Securities and Exchange Commission is considering an Obama era regulation which is so extreme that the former president’s own SEC rejected moving forward with it.
The regulation would deny independent investors access to currently available trading alternatives designed to allow them to hedge risks against market volatility unless they passed a test and were deemed qualified by a financial services provider.
At its core, the current regulatory proposal would impose unprecedented new burdens on investment advisors and brokers for publicly traded ETF’s that allow investment in inverse and leveraged funds. These funds provide individual middle-class investors the same ability to hedge market conditions that bigger players have. These investment instruments, which have existed for use by investors for years, provide opportunities for investors to diversify their portfolios. Like all investments, there are risks involved and they are all rightfully disclosed to investors under current Securities and Exchange Commission rules.
Under the new regulation, the brokers and advisors are being given a novel responsibility — one they have never before had — of having to determine whether an investor is capable of understanding a publicly traded financial product before allowing that investor to purchase that product.
The net result is that the proposed SEC regulation would create a massive disincentive for these investment tools to be offered to individual investors, effectively denying even the most sophisticated person access to effective, proven methods of mitigating risk.
If the SEC truly believes that the transparency about the risks of these types of investments is unclear or too mild, then they should and can address the language of those disclosures. But to require brokers advisors to collect unprecedented information and decide whether a client is capable of making their own decision is a dangerous expansion of government authority that even the Obama SEC chose not to move on and would be an irresponsible and downright damaging to the overall market.
The end result is that many investment firms will no longer offer these types of investment options. This means that the private investor who will be effectively denied access to investment vehicles which are commonly used by institutional investors as a means of levelling out the risk of investments.
SEC Commissioners Hester M. Peirce and Elad Roisman made the point that should this regulation go into effect, these funds may be denied to middle-class investors in a comment on the regulation, writing about the test which the brokerage or advisory firms would have to administer to investors in order to determine if they should be allowed to utilize these funds,
“The release does not specify how we expect brokerage or advisory firms to assess investors’ answers to these questions. Yet, the proposed rules would direct them to make a “reasonable” determination as to whether the investor is suited for trading geared products. By providing so little information about the result we are aiming to achieve, we worry that such a requirement will either become a meaningless check-the-box exercise or a regulatory deterrent for brokers and advisers to offer these ETFs on their menus at all.”
In addition to the these commissioners, the proposal has been criticized by leading conservative experts and organizations as a dangerous expansion of government oversight of the investment industry that will needlessly harm investors and our economy.
This heads you lose, tails you lose likelihood will have the effect of brokerages washing their hands of even offering these investment options and denying middle-class investors access to the same tools as their more well-healed counterparts.
The SEC comment period for this proposed regulation ends on March 24, with the Commission making a determination of whether to move forward with this draconian rule a few months afterward. Rather than denying investors access to sophisticated investment options, the SEC would be well-served to address transparency requirements to ensure that all investors have the risks laid out clearly for them, so they can make adult decisions about their own portfolios. In the end, the essential component of stock market investing is that the investors should be free to make their own decisions and it would be a grievous mistake to upend this basic principle with potentially disastrous consequences resulting from the regulatory precedent.
Rick Manning is the President of Americans for Limited Government.
Senate Dems hold economy hostage after demanding everything close to slow down Chinese coronavirus
By Robert Romano
Senate Democrats are holding the U.S. economy hostage after blocking legislation to protect small businesses, guarantee payroll and expand unemployment relief to tens of millions of workers.
The vote failed 47 to 47, with 60 needed to advance the bill.
The fate of 30 million small businesses and critical industries, indeed, the U.S. economy hangs in the balance after the federal and state governments have practically closed everything except for essential services.
The government has put the economy into an induced coma, and now it has a responsibility not to lose the patient.
By forcing almost the entire population to stay home for all intents and purposes, the government must ensure the American people have an economy to go back to. That’s where small business relief comes in.
Small businesses employ 60 million workers nationwide and are the backbone of our economy, but right now they are in serious danger of disappearing. Without immediate relief by way of forgivable loans to meet payroll, there may be nothing left on the balance sheets when this is over except debt.
Many of those businesses will never come back—unless Congress acts right now to protect them.
Here is the truth.
People are going to start running out of money very soon as cash reserves are depleted. Without revenues, every aspect of the economy will seize up. Soon, it will become a vast financial crisis as people become rapidly unable to pay their debts. Then, banks.
Already, the Federal Reserve is intervening by purchasing commercial mortgage backed securities and has opened a new $300 billion lending window to businesses and larger employers. Interest rates are back down to zero. And quantitative easing has begun anew.
The Senate bill would provide $300 billion to cover payroll for small businesses and another $200 billion for critical industries. By covering everyone’s payroll, everyone will be able to continue paying their mortgages and utilities. Businesses will be able to cover building and maintenance expenses.
Debt markets won’t seize up. The financial and digital portions of our economy will continue functioning. Vast uncertainty about the coronavirus outbreak will be alleviated.
These closures in response to a public health emergency are now themselves a financial emergency that must be addressed by Congress before it is too late.
We also need to salvage as much of the economy and businesses can be after the virus passes. After this is all over, we’re going to need them to rebuild America in the aftermath.
The Senate and House must take responsibility for everything being closed and to stop putting politics above all of our lives. There is too much at stake.
The only way to safely contain the virus is for Congress to incentivize the American people to stay home. What Congress does affects the health emergency directly. It has to safely house every American for the next several weeks or months.
Or else people and businesses will begin breaking the national lockdown out of desperation.
Robert Romano is the Vice President of Public Policy at Americans for
Limited Government.
Senate Democrats must quit playing politics and get serious to protect 30 million small businesses
March 22, 2020, Fairfax, Va.—Americans for Limited Government President Rick Manning today issued the following statement in response to the failed vote in the Senate to provide relief to the U.S. economy including 30 million small businesses in the unprecedented economic shutdown response to the Chinese coronavirus outbreak:
"It is abhorrent that Senate Democrats are attempting to hold our nation's economy and 30 million small businesses hostage in their neverending quest to turn crisis into political opportunity.
"The magnitude of the health emergency and the proposed Senate response emphasize how serious Senate Republicans are taking this crisis. No Republican was elected to spend trillions of dollars to revive an economy deliberately shut down to save a million American lives, and yet they have stood up and done what they believe is necessary to ensure Americans can get by while they wait in their homes for the virus to pass. We continue to believe that all spending should targeted to the specific needs created by the emergency, and any attempt to make permanent spending increases should be rejected.
"What's more, any attempts to fundamentally change our nation's health care system including the creation of any one size fits all medical billing system that lays the groundwork for socialized medicine should be rejected. These rate setting proposals fundamentally change the ability for the very heroes in the health provider community to be paid a fair price for their labor and it would be a punch in their guts to enact legislation now that punishes them while they are working tirelessly to save American lives.
"While Americans for Limited Government is uncomfortable with the amount of spending authorized, and the changes to the unemployment laws that dramatically expand the program having the likely unintended impact of encouraging businesses to lay off employees, rather than fight through the crisis, it remains important Congress come together. Democrats must stop their putting politics ahead of the lives and livelihoods of the American people.
"America is the greatest country in the history of mankind. We will survive this national challenge, and by passing legislation providing a safety net to allow the small business foundation of our economy to hit the ground running once we're past this crisis, we will come back rapidly and stronger than ever."
To view online: https://getliberty.org/2020/03/senate-democrats-must-quit-playing-politics-and-get-serious-to-protect-30-million-small-businesses/
