Roger Lowenstein, the journalist-turned-chairman of the Sequoia mutual fund, criticizes Warren, “the nation’s unelected regulatory czar,” for being too outspoken about the financial industry. At one point, Lowenstein condemns her for “painting bankers with as broad a brush as Donald J. Trump uses to demean Muslims.”
For the record, Warren has not called for all bankers to be barred from entry into the United States “until we figure out what’s going on.”
Lowenstein first disparages Warren for calling for the termination of Securities and Exchange Commission chair Mary Jo White for “failing to have the SEC draft rules requiring corporations to disclose details of their political spending.”
While it is terribly uppity of a Senator to have a perspective on a public policy issue, the corporate political spending rule is only one of Warren’s criticisms of White.
The letter she wrote to President Obama urging White’s firing is 12 pages long, only three of which discuss the political spending rule. Warren spends much more time in the letter on White’s desire to have public companies reduce disclosure to investors (a key priority of the U.S. Chamber of Commerce) and the SEC’s refusal to finalize 19 Congressionally mandated rules under the Dodd-Frank Act, from regulations on disclosure of conflict minerals to enhancing reporting of borrowing of securities.
Lowenstein calls Warren’s position on the SEC “turf encroachment,” adding that, “Last I checked, the SEC was a regulatory agency of the executive branch, in which Ms. Warren is not, in fact, employed.”
Last I checked, the SEC is an independent regulatory agency accountable to Congress, established by the Securities Exchange Act of 1934. Congressional oversight of the SEC happens at the committee level, for example by the Senate Banking Committee, of which Warren is a member.
Lowenstein also demeans Warren for opposing the appointment of investment banker Antonio Weiss to the No. 3 position in the Treasury Department. The author notes that, after Weiss withdrew from the appointment and was made an adviser to Treasury, he “brokered a highly praised law to restructure Puerto Rico’s debt,” proving that Warren is a dunderhead who doesn’t understand anything about regulation.
That law has been met with vociferous protest in Puerto Rico because it installed an unelected control board to usurp the island’s sovereign government and force continued austerity on its impoverished citizens. In the rarefied circles where Lowenstein mingles, this is seen as responsible and praiseworthy.
Finally, Lowenstein fumes that the SEC shouldn’t have to develop a political spending rule at all, because it distracts from the agency’s core mission. Instead, the SEC should think about “retail investors flocking to index funds” and whether they understand the risks of doing so.
As noted, Lowenstein is the director of a mutual fund, which stands to lose significant market share if investors leave for index funds. So his hit job on Elizabeth Warren has the dual purpose of lobbying a regulatory agency to protect his business.
Speaking of that mutual fund, Lowenstein should perhaps not be so confident that he is more knowledgeable than Warren about the ways of finance. Until this July, the Sequoia Fund was the second-largest investor in pharmaceutical firm Valeant, which is under SEC investigation for dubious accounting practices and a hidden relationship with a mail-order pharmacy. The fund lost 13 percent of its value in the first half of 2016.
Perhaps Sequoia’s investors would have been better served by a more active securities regulator.
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