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Congressman Andy Barr Wants Robinhood’s Young Day Traders to Be Free to Trade Themselves into Poverty While All of His Own Money Remains Professionally Managed

Courtesy of Pam Martens

Congressman Andy Barr (R-KY)

Congressman Andy Barr (R-KY)

During the Wednesday House Financial Services Committee hearing on the toxic business model gaining steam on Wall Street, where market makers pay for order flow from online brokerage firms like Robinhood in order to trade against the so-called “dumb money” from retail investors, there were regular bursts of hypocrisy from the Wall Street-funded Republicans on the Committee.

One of the most gag-worthy lectures came from Congressman Andy Barr (R-KY). According to the Center for Responsive Politics, nine of Barr’s top 15 donors to his Campaign Committee and Leadership PAC for the 2019-2020 campaign cycle are connected to Wall Street. Those donors include Prudential Financial (which is a derivatives counterparty to mega banks on Wall Street); Apollo Global Management, a private equity firm; Bank of America, parent of the giant brokerage firm Merrill Lynch; Charles Schwab, the retail brokerage firm; FMR Corp., parent of the Fidelity brokerage firm and Fidelity mutual funds; CME Group, parent of stock and commodities futures exchanges; Koch Industries – part of the infamous Kochtopus which has a sprawling trading operation; GoldenTree Asset Management and American Bankers Association.

On Wall Street, when a salesman is pitching a stock or investment strategy that will financially benefit him or the folks who provide him his paycheck, the expression is that he is “talking his book.” Listen to how Barr talked his book at the hearing on Wednesday against any efforts to regulate Robinhood’s seduction of young traders to actively trade:

Barr: “I do detect a paternalistic hostility to what I consider to be the foundation of our free markets. And that foundation is the freedom to take risks. It’s paternalistic because I hear an elitist sentiment that only sophisticated, only highly-educated institutional investors know what they’re doing and government should intervene to restrict commission-free trading to protect retail investors from themselves; that government knows best and retail investors are simply not smart enough to allocate their own capital for themselves. I think there’s hostility because it sounds like some of the witnesses want to pull risk-taking completely out of the system. Let’s be honest, that is code for doing away with free-market capitalism…It’s not the role of Congress or regulators to dictate the constructs of a user experience. If investors like the platform, it will succeed. If they don’t, it won’t.”

Barr is apparently completely ignorant of the 88-year history of securities laws in the United States which have specifically focused on protecting retail investors from the sharks on Wall Street.

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