The Trump administration's approach to streamlining the federal government is highly problematic and harmful to the trust that Americans place in their financial institutions.
That was one of the key messages that Ali Khawar, former principal deputy assistant secretary at the Department of Labor’s Employee Benefits Security Administration, drove home during the opening session at Pensions & Investments’ Defined Contribution East conference on March 10.
Khawar criticized the “weird, anonymous centralized email” sent to government workers asking them to list their five accomplishments over the previous week.
“One fundamental problem I have with this approach is that it is demoralizing the very people who are responsible for getting everything done right,” he said, explaining that it is typically 10% of workers who are doing 30% of the work.
An agency’s most valuable workers are not only going to be less productive but are also going to leave, he said.
Khawar warned that the government’s “slash-and-burn” approach would lead to less-effective agencies.
“You’re going to have an agency that has less expertise, is less good at what it does, and is going to be less helpful to the industry in multiple ways,” he said, referring to EBSA and other agencies.
Khawar reminded the audience of EBSA’s strong enforcement record. EBSA was the first agency to open an investigation into Enron and one of its investigators played a critical role in the prosecution of Bernie Madoff.
Khawar stressed that EBSA’s enforcement program was critical to the trust that workers place in their financial institutions, noting that people in many other parts of the world don’t trust their institutions.
In the U.S., people trust that if people take money out of their paychecks, they’re not stealing it, he said.
Nevertheless, theft of employee contributions from defined contribution retirement plans is a problem in the U.S., Khawar added.
“We prosecute criminal cases every year involving those issues,” he said. “The reason that there’s not widespread concern about it is because we have a high level of trust that the government is going to be looking out and catching those people to the extent that they can find them.”
Khawar complained that with only 800 employees, EBSA’s resources are stretched, given the wide scope of its work, including civil and criminal enforcement, plan sponsor education, economic analysis, examination of Form 5500s and more.
“That’s not enough to do everything that we need to do. It’s not big enough to be your little angel on your shoulder,” Khawar said.
Khawar conceded that there is a role for making government run better. If the industry thinks that “the reins are too tight on private equity,” or the “approach to retirement income is wrong,” those conversations are worthwhile and should be had, he said.
“Those are totally legitimate debates to have, but to actually turn them into something you’re going to need an agency that can carry them out,” Khawar said.
