Sometimes if you look closely enough, you can see government officials not just making bad or negligent decisions — but actually acting like comic book villains. Three recent moves by President Trump’s labor secretary Eugene Scalia make it seem as if the agency is intent on being a Legion of Doom that funnels workers’ retirement savings to Wall Street billionaires and fossil fuel conglomerates.
First came Scalia’s announcement about private equity. He said that in order to make sure “ordinary people investing for retirement have the opportunities they need for a secure retirement,” his agency is expanding the kinds of investments that financial managers are allowed to shift workers’ retirement savings into.
The new letter allows for investments in private equity firms that charge notoriously high fees and often do not deliver returns that beat inexpensive stock index funds. Those firms also have made headlines fleecing investors, laying off workers, gutting local economies, strip mining media outlets, and creating public health and environmental disasters — all while pumping investors money into fossil fuel assets.
Only a few days after Scalia loosened restrictions for private equity investments, he went in the opposite direction, proposing a rule to restrict financial managers’ authority to move workers’ retirement savings into socially responsible and environmentally sustainable investments (known as ESG). He declared that “retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan” — a statement implying that green investments are automatically at odds with the goal of maximizing returns, even though that has been false and is likely becoming even more false as climate risk intensifies.
The “new red tape created by the Trump administration rule may dissuade fiduciaries from incorporating” ESG investments into their portfolios, according to Bloomberg News.
Capping off the regulatory massacre, Scalia then completed his longstanding effort to gut an Obama-era rule designed to make sure financial advisers are working in the best interests of their clients. Before being appointed Labor Secretary, Scalia was a corporate lawyer who was “part of a team representing the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and other associations in successful challenges” to the Obama rule, according to the Wall Street Journal.
These three directives were issued separately. But if you consider them together, Scalia’s nefarious agenda is right out in the open, almost as if he’s deliberately doing a Dr Evil impression.
Here is the Secretary of Labor actively weakening conflict-of-interest rules for money managers and helping them shift workers’ savings into high-risk private equity schemes — all while trying to prevent those same financial managers from moving workers’ savings into lower-risk, environmentally sustainable investments. And he’s doing this while insisting with a straight face that the moves are about protecting workers and their retirement savings.
Left unsaid is that the trio of directives are a potentially big financial boost to the fossil fuel and private equity industries — and surprise, surprise, they’ve pumped huge amounts of money into the Republican Party. Since 2016, donors from the fossil fuel industry and donors from private equity and investment firms have delivered roughly $300 million to GOP candidates for federal office, according to data compiled by the Center for Responsive Politics.
In light of that, Scalia’s seemingly contradictory directives can be understood as something much more straightforward: a scheme hatched by one of Central Casting’s most cartoonish bad guys. The initiatives are not designed to protect workers, but to instead protect the industries that Republicans are relying on to bankroll their election campaigns.