By now, America has already heard every member of the Democratic Party talk about voting for the recently passed (and misnamed) Inflation Reduction Act, which will increase taxes on nearly all Americans, including those making between $50,000-$75,000.
For those Americans, taxes will increase by $1.9 billion annually. Voters have every right to be irate, but they should not be surprised. Even those that nonchalantly follow politics should already be conscious of the Democratic Party’s tendency to promote, create, and campaign for financial regulations that seem to benefit their inner circle.
In 2010, when the Democratic-controlled Congress passed the Dodd-Frank bill, the so-called Wall Street Reform and Consumer Protection Act, it touted the bill as a shield against the excesses of Wall Street banks. In the end, Goldman Sachs and other major investment firms that donated heavily to Democrats endorsed the bill, purportedly because it helped to squeeze smaller competitors out of the marketplace.
The same holds for the left’s support of Environmental, Social, and Corporate Governance (ESG) investments. Liberal members of Congress and major investment firms say that ESG protects the environment while pushing diversity and inclusion in the workplace. But who really benefits from these policies?
Investment firms like BlackRock, which is tied heavily to the Biden administration has over $500 billion in ESG assets, sound the drum in support of ESG. These investment firms bludgeon companies and countries into adopting ESG policies that raise consumer prices, kill jobs in needed sectors like energy, and even cause food shortages. Average Americans aren’t benefiting from ESG, but investment firms and other Democratic donors are laughing all the way to the bank.
In the non-profit world, a group called Better Markets, which works closely with Sen. Elizabeth Warren (D-MA) on financial regulatory policy, has also joined the gold rush.
In 2015, Better Markets, a group that claims to advocate for transparency and oversight, came under fire for lobbying decisionmakers to more heavily regulate financial firms that the hedge fund of Mike Masters — the group’s near-exclusive funder — had call options against to the tune of hundreds of millions of dollars. A former Securities and Exchange Commission counsel and a former Commodity Futures Trading Commission commissioner appointed by President Barack Obama called the group’s convenient failure to disclose Masters’ holdings a huge and unprecedented conflict of interest that violates the spirit of congressional disclosure laws.
As if advocating for new regulations that would allow its funder to manipulate stock prices for his own benefit isn’t enough, Better Markets is now back for more. The group just came out with a new analysis about the so-called improper late 2020 to early 2021 trading of “meme stocks,” such as GameStop, where it unfairly points the finger at market forces and innovation — such as the popular trading app Robinhood — instead of people like its own funder.
SEC filings show Masters held $18.8 million in GME stock on December 31, 2020, an 84% increase from his $10.2 million in holdings on September 30. While it’s unclear how much Masters profited or lost from these transactions, one thing remains clear: he was actively trading GME as it was soaring to unpredictable heights in 2020, well before the GME market fallout began in January. But don’t tell Better Markets that. In sworn testimony to Congress, Dennis Kelleher, the Co-founder, President, and Chief Executive Officer of the group, blamed retail investors and Robinhood while conveniently refusing to go after Masters Capital Management. So much for transparency and oversight.
While Democrats do a lot of talking about income inequality, this par-for-the-course hypocrisy among left-wing groups and decisionmakers is doing a whole lot to make the rich richer and poor poorer. Their deliberate use of power to line their pockets is devastating the self-regulating free market forces that have protected American families for generations and someone needs to put an end to it.
Fortunately, one senior Republican lobbyist signaled that he believes the Democrats’’ deceptive “financial reform” movement will largely come to a halt next year when Republicans are expected to regain a majority in the U.S. Congress. He said, “When Republicans take control of the House, one of their top priorities will be oversight and hearings into corrupt D.C. influencers.” Speaking more directly about his suspected fate of Better Markets, he said, “Dennis Kelleher testified before Congress about trading GameStop while his chief funder was himself trading the stock. What’s more corrupt than that?”
With Rep. Patrick McHenry (R-NC) and Sen. Mike Crapo (R-IN) appearing poised to take over the relevant finance committees from the Democrats next congressional session, here’s hoping he’s right. The Democrats’ financial reform shell games have gone on long enough, and it is long past time for someone to pull the plug.
Michael Busler is a public policy analyst and a professor of finance at Stockton University in Galloway, New Jersey, where he teaches undergraduate and graduate courses in finance and economics. He has written op-ed columns in major newspapers for more than 35 years.
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