More Lessons in Public Interest Journalism: The Fiduciary Rule

April 19th, 2016 · 1 Comment · financial coverage, journalism, labor, regulation, role of government

By Arthur Alpert

As I was saying last time, seeing “Spotlight”, the Oscar winning film about the Boston Globe’s exposé of widespread abuse of children in the local Archdiocese, reminded me that many newspapers set themselves the goal of serving the public interest.

But what is the public interest?

Well, a commonsense definition might be “the welfare of the general public in contrast to the selfish interest of a person, group or firm.”

Or, if you prefer:

“The welfare or well-being of the general public; commonwealth.”

I found both definitions on the Web, selecting them from millions, many along the same lines. It’s about most of us, not a few.

Of course, when we get down to specifics, citizens will differ on what’s in the public interest and how to reach it. Yet whether we situate ourselves on the left or right, most of us would agree a public interest exists. (Some libertarians, for whom there are only individual struggles in a Hobbesian world, might dissent.)

I’m telling you all this because the public interest came to mind when I read the story –and headline – the Albuquerque Journal ran on the first Business page Thursday, April 7. Atop the Associated Press (Washington) piece by Marcy Gordon, the editors placed this rubric:

“Retirement investment brokers face tightened rules.”

That grabbed me. You see, Ms. Gordon’s lead said “The Obama administration acted Wednesday to require that brokers who recommend investments for retirement savers meet a stricter standard that now applies to registered advisers. They must act as fiduciaries – trustees who are obligated to put their clients’ best interests above all.”

(Journal editors put the fiduciary part in a second deck.)

Not a great lead, convoluted, but it did tell us the Administration promulgated new rules forcing these advisers to put our interests before theirs.

So how come the headline writer highlighted the brokers’ new situation?

At the N.Y Times, they took a different tack:

“‘Customers First’ to Become the Law in Retirement Investing

Easily done, of course, because whoever wrote that rubric followed journalistic convention, working off reporter Tara Siegel Bernard’s lead:

“Under new regulations for financial advisers issued Wednesday, Secretary of Labor Thomas E. Perez said, putting customers first “is no longer a marketing slogan. It’s the law.”

Big contrast, huh?

At this point, I usually also cite a Washington Post story for comparison’s sake, but this time I couldn’t find one. However, more than a year ago (Feb. 23, 2015) the Post published a column by Jared Bernstein, a former chief economist to Vice President Biden, in which he explained the rationale for the Labor Department’s proposal:

“The new fiduciary standard,” he wrote, “should block what honest brokers call “over-managing:” unnecessary rollovers, churning (over-active buying and selling that generates brokers’ fees at the expense of returns), and the pushing of expensive and risky products like variable annuities.”

Does that go on? Like Claude Rains in “Casablanca,” I’m shocked.

But I digress.

Here’s the point: the Times’ story assumes the public interest lies in the protections afforded thousands (millions?) of people.

Conversely, the Journal’s story and headline assume the crux of the matter is the plight of investment advisors faced with new regulations. An industry website put the number of such advisers at 300,000 or so nationally.

Why? Why write a headline appropriate, maybe, for a brokerage’s house organ?

I don’t know. My educated guess is that it reflects the Journal’s general attitude toward the relationship between business and government. In its editorials, in the preponderance of the opinion pieces and, sadly, in the news stories on business it publishes and those it ignores, the message is clear. Governments should keep their stinkin’ hands off the nation’s poor, put-upon, over-burdened mega-corporations.

(Except when governments hand over technology developed on the public’s dime to private enterprise or smother corporate enterprise with subsidies. That, per the Journal, is what the public’s tax dollars are for.)

If my speculation explains the strange headline, well it wouldn’t be the first time Journal editors inserted their politics into the news.

But to return to where we began, the Boston Globe and the public interest, it’s clear the Journal is not on the same page. Its purpose is to serve the interests of a few, rather than the general public. Which purpose infuses the editors’ decision-making, replacing the journalistic considerations popular in professional newsrooms.

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One Comment so far ↓

  • Emanuele Corso

    Points well taken, Mr Alpert. I watched “Spotlight” myself and marveled over what was portrayed as the agony of discovery and then disclosure. It seems to me not to be hyperbolic in the face of so many police shootings to say we are living in a quasi police state where even the news media are reluctant to speak out. Albuquerque has had its share. The Globe deserves credit for both reportage and courage.

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