Page 11 - Investment Advisor March 2022

“But at the same time, let’s blame to] step-up in basis, and changes to the go to the Republicans but by how many
somebody. As much as I like [Fed estate taxes or capital gains; probably will seats — some people say 35 to 40 seats;
Chairman] Jerome Powell, he was way get [Treasury Secretary Janet] Yellen’s I’m at around 20.”
too sanguine last spring going into the international tax and 1% to 2% increase The Senate “is a tougher call,” Valliere
summer about the threat of inflation. on wealthy folks.” In any new stimulus said. The Senate “could flip back [to
Larry Summers wasn’t; The Fed got way, bill, “the tax hit is going to be tolerable Republicans] by a seat or two or stay
way, way behind the curve. It’s one of for the economy and the markets.” with the Democrats in a tie.”
the reasons inflation got out of control.”
The economy, Valliere continued, 4. THE FED WILL RAISE INTEREST 6. TOUGHER FINANCIAL
“was like an ailing patient as the pan- RATES 3–4 TIMES. REGULATION IS COMING.
demic roared. Congress viewed this Powell “was late to acknowledge the What does Biden do with two years of a
ailing patient as a patient that needed [inflation] problem but now he’s gone Republican House? He will focus on two
a lot of medicine and Congress real- way overboard in the other direction” things: geopolitics and regulation.
ly gave too much medicine. The side with anticipated rate hikes. “Everyone on In geopolitics, “we face the greatest
effect was inflation.” Wall Street, at Goldman Sachs and all the crisis that the world has seen since the
Congress last year “spent $6 trillion big banks are talking about four or five 1962 Cuban Missile Crisis,” Valliere said.
to stimulate the economy — infrastruc- rate hikes this year. Starting in March at “The story in Ukraine is very unnerving.
ture bills, COVID relief … not all of the the next FOMC meeting , many people I’ve been quoted as saying there will be
money has been spent, and every state feel there could be a rate hike every meet- a diplomatic solution. It’s not going to be
in America has an enormous surplus.” ing — from now until well into fall. perfect … but it might be a solution that
“I’m on the low end; I’m at three to allows things to cool off a bit.”
3. TAX INCREASES IN ANY NEW four hikes … the Fed has had a funda- On regulation, “this is the most
STIMULUS BILL WILL BE ‘TOLERABLE.’ mental awakening on how serious the aggressive group of progressives I’ve
“There is a chance for one more bill,” inflation problem will be. I don’t see ever seen in the regulatory com-
he said. “That the famous [Sen.] Joe inflation really being tamed for another munity,” he said. “Gary Gensler
Manchin can be persuaded to pass one year or longer.” at the [Securities and Exchange
additional stimulus bill for a mere $1.4 Commission], and Sarah Bloom Raskin
or $1.5 trillion. There is a sense that he 5. THE HOUSE WILL FLIP TO who will be head of regulatory at the
can be brought around on [pre-kinder- REPUBLICAN CONTROL. Fed, they will be quite aggressive.”
garten] and expanded Obamacare.” Right now it would take the turnover of
In any new Build Back Better bill, “we five House seats, Valliere said. “It’s not Washington Bureau Chief Melanie Waddell
can … write off any chance for [an end an issue of whether it [the House] will can be reached at [email protected].

New Bill Would Fund States’ Efforts to Protect Older Investors
Senators introduced in late January the Empowering States The senators cite a report from the Senate Special
to Protect Seniors from Bad Actors Act, bipartisan legislation Committee on Aging, released during the last Congress,
to create a grant program, implemented by the SEC, that which found that older Americans lose approximately $3
would work closely with state securities regulators to protect billion each year to financial scams and abuse. “A separate
older investors. survey from the Investor Protection Trust found that approxi-
The bill, introduced by Sens. Chris Van Hollen, D-Md., Tim mately seven million Americans have reported being victims
Scott, R-S.C., Raphael Warnock, D-Ga., and Cynthia Lummis, of financial exploitation,” the senators said.
R-Wyo., “will provide $10 million in grants annually to state The bill is endorsed by AARP, Americans for Financial
regulators to support the investigation and prosecution of Reform, Certified Financial Planner Board of Standards Inc.,
senior financial fraud cases, invest in technology and training, Consumer Federation of America, CFA Institute, Financial
and conduct outreach to older Americans and increase their Services Institute, Insured Retirement Institute, National
awareness of scams,” the senators said. Association of Insurance Commissioners, North American
The bill was previously introduced in the House by Rep. Securities Administrators Association, the National
Josh Gottheimer, D-N.J., and passed out of the Financial Association of Insurance and Financial Advisors and the
Services Committee by voice vote in November. National Association of Personal Financial Advisors.

MARCH 2022 INVESTMENT ADVISOR 9