This week, the hottest Republican talking point outside of $16 muffins is the claim that the federal government is fining employers for hiring more workers. It's not true but it's spreading like wildfire on networks such as Fox News and publications such as Forbes, Real Clear Politics, and Human Events. The meme derives from the congressional testimony of Euro Pacific Capital CEO Peter Schiff on Sept. 13 in which he complained that because of "security regulations" he was fined $15,000 for hiring "too many brokers in 2008." Schiff, who was Ron Paul's economic adviser during his 2008 presidential campaign, caused quite the outrage.
"He was actually penalized by the government for hiring too many people," said Dana Perino on Fox News's The Five. "That's the message of this administration," piped in co-host Andrea Tantaros. "They really want to crush the job creators." Human Events staff writer John Hayward agreed, noting that Schiff "knows a few things about how the government can destroy jobs" in a post sub-titled "How the government kills jobs."
It's quite the allegation. Is there any truth to it? On it's face, it's not ridiculous to assume that the "security regulations" Schiff was testifying under oath about were imposed by the federal government. That's who typically regulates the economy. But in this case, Schiff's company Euro Pacific Capital was fined by an independent regulatory organization called the Financial Industry Regulatory Authority, or FINRA. We raised this point with Euro Pacific Capital communications director Andrew Schiff (Peter's brother) but he brushed it off. "It technically is not part of the government but the issue we have is that the government requires the financial industry to have the [regulatory] body."
That's fair, to a point. In 1938 Congress passed the the Maloney Act [PDF], an amendment to the Securities Exchange Act of 1934, which authorized the National Association of Securities Dealers, the precursor to FINRA, that is subject to oversight by the Securities and Exchange Commission. But the self-regulatory organization --their corporate brochure [PDF] says, "We’re an independent, not-for profit organization" -- has faced criticism for decades from those who think the government should regulate the industry. (For instance, Bernie Madoff was vice chairman of the NASD while he was running his Ponzi scheme.) Libertarianism taken to its furthest extreme might object to even self-regulation, but the fact of the matter is FINRA is not a part of the federal government--a distinction that conservative pundits gleefully passing along Schiff's testimony couldn't be bothered with. In fact, on the same day that Schiff was giving his testimony to Congress about the spectre of government regulation looming over the economy, another committee was hearing testimony from FINRA chief Richard Ketchum on a Republican proposal to shift government oversight of financial advisers to the industry's self-regulatory body. (Good government groups like POGO are aghast at the proposal.)
So, to suggest that the $15,000 fine slapped on Euro Pacific Capital was evidence of the Obama administration's desire to "crush the job creators" is a stretch of pretty epic proportions. Especially when you consider the reason they got the fine. It was not even because FINRA limits the number of brokers its members can hire. It does, however, require them to file a form ticking off the necessary compliance measures ahead of an expansion. Someone Schiff referred to as a "bad compliance officer" didn't get the proper pre-approval from FINRA, which got the company in trouble with the group. Schiff says that because of the compliance officer's mistake that employee is no longer with the company. It all sounds annoying, but it's not an act by the Obama administration.
So you see, it's a complicated grievance. But you wouldn't get that from watching Fox News.