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March 23, 2023
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Destroying Fiduciary Protections: Why We Need to Preserve Trust and Responsibility… 

What “fiduciary duty” means…

Fiduciary duty is a legal obligation that requires an individual or organization to act in the best interest of another party, known as the beneficiary or principal. This duty arises when the two parties have a special relationship of trust, confidence, or responsibility.

The fiduciary must prioritize the interests of the beneficiary above their own and avoid any conflicts of interest. This means they must act with loyalty, honesty, and good faith in all their dealings with the beneficiary and not use their position for personal gain.

Examples of fiduciaries include trustees who manage trust assets for the benefit of the trust beneficiaries, financial advisors who manage collective or individual investment portfolios for their clients, and corporate directors who must act in the best interest of the company’s shareholders.

Breaching fiduciary duty can result in legal action, damages, and even criminal charges in some cases.

Without the legal protections afforded by fiduciary accounts, financial advisors are absolved of the legal responsibility to protect their beneficiaries…

Eliminating fiduciary protections can have several risks, including:

  1. Conflicts of interest: Without fiduciary duty, individuals and organizations may act in their own interests instead of prioritizing the interests of their beneficiaries or clients.

  2. Decreased trust: Fiduciary duty creates a special relationship of trust and confidence between parties. Eliminating it can erode trust in institutions and damage relationships.

  3. Financial harm: Fiduciary duty is essential in financial transactions, such as investment management and retirement planning. Without fiduciary protections, individuals may suffer economic injury due to poor investment choices or fraudulent activities.

  4. Legal consequences: Eliminating fiduciary duty could expose individuals and organizations to legal action and damages for breaching their duty to act in the best interest of their beneficiaries or clients.

  5. Ethical considerations: Fiduciary duty reflects ethical considerations and principles of fairness, loyalty, and honesty. Eliminating it could undermine these principles and lead to unethical behavior.

What does market manipulation look like…

One of the 2008 financial crisis's underlying factors was creating a false sense of security, pun intended, surrounding dodgy investments. Whereas financial institutions, pension funds, and the like were prohibited from investing in low-grade, high-risk securities, the Wall Street Wizards concocted phony schemes that were sold to the public as “insurance” against issues arising from investment defaults and interest rate mismatches. Unlike proper insurance based on actuarial science, these products were uncontrolled and unmonitored as they turned dodgy “BB” rated securities into “AA” investment grade securities where financial institutions snapped them up for their superior yields.

As we have seen with the Silicon Valley Bank failure, the bank was crippled by a maturity mismatch in a rising interest rate environment. It was the fiduciary duty of the bank’s executives to monitor and mitigate market risks using non-actuarial insurance products, such as swaps, which are financial contracts that allow parties to transfer financial risk between them. Unlike traditional insurance policies, which protect against specific events, swaps are designed to hedge against financial risks associated with market fluctuations, interest rate changes, or other economic variables.

A swap is an agreement between two parties to exchange cash flows based on different financial instruments, such as interest rates, currencies, or commodity prices. The parties agree to exchange cash flows periodically over a specified time period based on a predetermined formula. Swaps can be used for various purposes, such as managing interest rate risk, hedging against currency fluctuations, or speculating on market movements. They are typically used by financial institutions, such as banks and investment firms, as well as by corporations and other organizations.

While swaps can offer benefits, such as reducing financial risk and improving liquidity, they also come with potential hazards, such as counterparty risk, liquidity risk, and market risk. Counterparty risk refers to the risk that the other party to the swap will default on their obligations. In contrast, liquidity risk refers to the risk that a party may be unable to exit the swap contract when needed. Market risk refers to the risk that the value of the underlying financial instrument may change unfavorably.

The Obama-Biden regime’s bailout provides cover to the banker’s Democrat asses…

By manipulating the customary FDIC insurance coverage from $250,000 to millions and promising to make depositors whole, the regime eliminated a round of crippling lawsuits that would have seen the bank’s executive team liable for a breach of their fiduciary duties and possible fines and prison terms.

What wasn’t mentioned was that many of the bank’s loans went to projects will fell in line with the progressive communist democrat green power agenda and other social engineering ventures.

Go woke go broke! SVB hired board obsessed with diversity, invested $5BN for 'healthier planet' and held month-long Pride celebration - but had NO chief risk officer for eight months last year

  • Silicon Valley Bank had an A rating for its Environmental, Social and Governance policies as it increased diversity and invested in sustainability startups
  • But for eight months last year, the bank did not have a chief risk operator
  • At the time, it was investing clients' money in low-interest government bonds and securities that saw their value fall when interest rates rose

Now, many are slamming the financial institution for focusing too much on woke policies and not enough on its investments.

It said in its 2022 ESG Report that the bank strives to 'create a more just, equitable and sustainable world.'

Among the initiatives included in that report are a 'commitment to provide at least $5billion by 2027 in loans, investments and other financing to support clients' sustainability business.

'SVB's Sustainable Finance Commitment aims to support companies that are working to decarbonize the energy and infrastructure industries and hasten the transition to a sustainable, low-carbon, net zero emissions economy,' the report states. <Source>

And it is about to get worse as the regime dissolves or dilutes fiduciary responsibilities in favor of those pursuing a progressive communist democrat “woke” agenda…

House fails to override Biden veto of bill targeting ESG investing in pensions

The House failed Thursday to override President Biden’s first veto, delivering a blow to critics of so-called ESG investing who tried to scuttle a Labor Department rule that allows retirement plan managers to consider factors like climate change and social justice politics in their investment decisions.

Republicans failed to muster the two-thirds majority needed to override Mr. Biden’s veto of that bill that would have prevented 401(k) fiduciaries from engaging in environmental, social and corporate governance investing — or ESG — that critics have denounced as “woke” capitalism.

The House voted 219-200, with Rep. Jared Golden of Maine being the lone Democrat to break ranks and side with every Republican — a similar result to when the chamber last month first passed the measure.

Due to the failed vote, the Senate will not vote to override Mr. Biden’s veto, sparing vulnerable Democrats in the upper chamber from having to buck the president again.

The Senate passed the anti-ESG measure 50-46 earlier this month with bipartisan support, thanks to Democratic senators facing difficult reelection paths next year: Jon Tester of Montana and Joe Manchin III of West Virginia. <Source>

 This is a clear demonstration that this is about elections and electability and not protecting senior citizens and other investors from the regime’s tyrannical predations.

Bottom line…

Without the protection of fiduciary responsibilities and the ability to pursue legal remedies, our money can be pissed away by progressive communist democrats with zero concern for the depositors and investors.

We are so screwed.

-- Steve

“Nullius in verba.”-- take nobody's word for it!

“Beware of false knowledge; it is more dangerous than ignorance.”-- George Bernard Shaw

“Progressive, liberal, Socialist, Marxist, Democratic Socialist -- they are all COMMUNISTS.”

“The key to fighting the craziness of the progressives is to hold them responsible for their actions, not their intentions.” – OCS

"The object in life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane." -- Marcus Aurelius

“A people that elect corrupt politicians, imposters, thieves, and traitors are not victims... but accomplices” -- George Orwell

“Fere libenter homines id quod volunt credunt." (The people gladly believe what they wish to.) ~Julius Caesar

“Describing the problem is quite different from knowing the solution. Except in politics." ~ OCS