In case you missed this article from last April, “Congress Quietly Repeals Congressional Insider Trading Ban, you might want to read it. It’ll answer the question: “How can a member of Congress become worth tens of millions of dollars while on a salary that makes that impossible?” It’s called insider trading — and it’s legal for your congressman or congresswoman.
And speaking of corruption in the big money game, try this one:
The friend who sent me this last one included this note:
For as long as I can remember, these [expletive deleted] have come up with one scheme after another to siphon money from middle class investors to the top 1%. When one is exposed, they dream up another — but there is never any prevention. There are never any serious consequences.
The same friend sent me this article:
He drew my attention to this paragraph:
We have actually encountered an advisor who sold a client a large annuity, put it in a qualified IRA account, charged a management fee in addition to the large commission earned and then charged an additional fee for market timing. Between the M&E charges of the insurance company, the management fees for the underlying investments, the advisor’s asset management fee, and the market-timing fee, this client was paying over 4.5% per year!
And then he commented on it:
Goes on every day. At a 7% nominal growth rate and 2.5% inflation, in real dollars the investor makes nothing and the seller makes 2%. Just one example of the systematic transfer of wealth from the middle class investor to the top 1%. Year after year, decade after decade, in every aspect of investing, Wall Street outsmarts it’s clients.
When I asked him how is it that investors can be so…uh…stupid, he answered with this:
Something like 93% of people are considered “financially illiterate.” Wall Street firms fight this like crazy because they know “fiduciary duty” means “less money for them.” There are hundreds of lobbyists working to completely defang Frank-Dodd. It’s like a financial-political complex. Do our politicians respond to us or do they respond to money? Especially since their constituents won’t know any better anyway.
Back to government and corruption, Dan Mitchell is right: