Money matters 

Why did Sen. Tester flip his support on a key fiduciary rule?

It's easy to forget now that middle-class Americans are using their lucrative new jobs to buy cars, houses and college educations again, but about seven years ago this country suffered a financial crisis. In the wake of that crisis—the worst we'd seen since the Great Depression—Congress passed a package of reforms called the Dodd-Frank Act. Dodd-Frank contained several provisions to curb the excesses that caused the financial crisis in the first place. One of them empowered federal regulators to create a so-called fiduciary rule.

I promise this is going to get more interesting soon. A fiduciary is anyone in a paid or elected position of trust. For the purposes of Dodd-Frank, that means financial advisors: brokers, dealers, investment counselors—anyone who makes his money telling other people how to invest theirs.

In the years before the 2008 crash, a lot of fiduciaries profited by steering their clients toward risky investments. These financial instruments were not always the best fit for customers; some of them, like subprime mortgage derivatives, were downright volatile. But they did offer big commissions to the fiduciaries who sold them, so they sold in vast numbers—often to less savvy investors who did what their financial advisors recommended and lost their shirts as a result.

The fiduciary rule seeks to resolve this conflict by requiring fiduciaries to act in the best interests of their customers. It's kind of dry and hard to understand. Fortunately, Montana Democratic Sen. Jon Tester provided us with a useful illustration of how fiduciary responsibility works—or fails to work—when he joined Republicans in an attempt to block the fiduciary rule posed by the Department of Labor.

Tester voted for Dodd-Frank when it passed in 2010. The version of the bill for which he voted contained a provision that allowed the federal government to require financial advisors to prioritize their customers' financial success ahead of their own—to sell the investment that fits the client, not the one that yields the biggest fee. Now that Labor is ready to implement that rule, however, Tester is against it.

He has also raised about $3 million in campaign contributions from the financial services industry over the course of his career. In what I can only describe as an exciting coincidence, $2.3 million of those contributions arrived in 2015. By staunchly opposing the fiduciary rule, Tester appears to have served his own financial interests at the expense of those of his clients, the voters of Montana.

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It's a good thing there's no written fiduciary rule for senators. If there were, ours might be hard-pressed to explain why, $3 million later, he is against the thing he voted for in 2010. But I am sure he changed his mind about the importance of fiduciary responsibility for a good reason—one that didn't actually result from the massive contributions he received from the industry he no longer wants to regulate, but merely coincided with them.

Still, an unpleasant kind of irony seems to be at work here. Seven years after the financial services industry wrecked the world economy, bankrupted millions of Americans and rolled back decades of wage growth for working people, we almost passed a law requiring those who manage our monetary investments to act in our interest. But at the last minute, they seem to have bought off those who manage our civic investments instead.

Three million dollars may oblige Tester to the financial industry. But he bears a fiduciary responsibility to the people who put him in office. If Dodd-Frank is bad for the voters of Montana, Tester is professionally obligated to tell us why. Until he does, he is operating as an object lesson in how it feels to have your paid advisor put his own interests ahead of yours.

We need Tester to implement a fiduciary rule for financial advisors. Fortunately, the rule for senators is already in place. If we find that he has served his own interests at the expense of ours, we can vote him out of office. It's a slow-acting rule, but it's far-reaching. It covers not just conflicts of interest but the appearance of such conflicts. Now would be a good time for him to explain why his actions on Dodd-Frank are not what they appear to be.

So far this year, the financial services industry has given Tester about $3.50 for every registered voter in Montana. That's a lot of money, but it's not enough to buy an election. Tester should remember who his real clients are, and who is merely showering him with perks.

Dan Brooks writes about politics, culture and his vanishing retirement at

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