February 03, 2017
According to the Wall Street Journal, Donald Trump and the Republicans in Congress are looking to get rid of the Dodd-Frank financial reform bill and to repeal the fiduciary rule which requires financial advisers to give advice that is in the best interest of their clients. Without this rule, many financial advisers would give advice to clients suggesting they invest in products which may not be good for them, but pay the advisers a high commission.
While the fiduciary rule and the consumer protections in Dodd-Frank are often portrayed as being important for consumers, which they are, they also serve an important economic purpose. If we make it more difficult to make profits by designing deceptive profits, then banks and other financial institutions will have to do things like offering better service and lower fees to attract customers. While ripping off customers is simply a form of redistribution (from customers to bankers and shareholders) providing better service and products is economic growth. In other words, people who care about growth rather than redistributing income upward should be in favor of these regulations.
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