Lately, here and there, people seem to be catching onto the idea that--just maybe--Sen. Susan Collins isn't who she says she is:
I praised Maine Senator Susan Collins for wanting to extend [a fiduciary] duty to brokers who sell to institutions such as pension funds and mutual funds.For a long stretch, Collins "opposed" President Bush's strategy in Iraq--but wouldn't lift a finger to do anything about it.
Wow, did I ever speak too soon. Last week, Collins declared herself in favor of gutting these protections for retail investors like you and me.
In brief, a fiduciary duty requires that brokers put their customers' interests ahead of their own. At present, they're allowed to put their own interests first--for example, by selling you something with a higher commission when a product with a lower commission might perform even better.
Last week, devious brokers found their champion. Collins proposed an amendment to the reform bill, to exempt from fiduciary duty brokers who sell only mutual funds, variable annuities, and certain closed-end funds. Furthermore, the Securities and Exchange Commission could expand the exemption to brokers selling other products packaged by their firms.
Folks, those are exactly the products that brokers are paid the most to sell and that carry the highest fees. In-house mutual funds cost more, and perform more poorly, then comparable lower-fee funds. The complications of closed-end funds makes them a source of abusive sales. Variable annuities are so laden with fees that it’s a miracle if customers come out even.
Collins wants to remove a broker's duty of care in the areas where it's needed most.
She called candidate Obama's health care plan "pretty good" during the campaign--and then did everything in her power to prevent a less progressive version of it from being enacted.
She complains about the deficit but votes for trillions in Republican-sponsored spending without offsets. And despite her occasionally encouraging environmental rhetoric, she continues to oppose the main climate change proposal pending in the Senate.
If you've been following Collins, it's pretty obvious what's going on here.
But it's nice to see that even casual observers of the junior senator are starting to connect the dots.