In one of our EconomicEquality blog posts, I extolled commission-free, fractional trading as a pathway to wealth equality.  It wasn’t because I admired Robinhood – quite the contrary.  At the time, I was thinking of established brokers with effective customer-service and security safeguards such as Charles Schwab, but no matter.  I was still wrong.  I should have looked more carefully behind the “democratization” panegyrics draped in front of a business model which, like so many other “democratizing” financial services before it, supported wealth accumulation first, foremost, and pretty much exclusively for company owners, not vulnerable customers.

It is certainly correct that commission-free trading and fractional shares open equity markets to the millions, millions who urgently need alternatives to savings in this endless era of negative real savings rates.  It is also true that equity investing needs democratizing – the top one percent now owns 53 percent of U.S. financial assets and the top ten percent have almost all the rest.

However, there’s a huge difference between low-cost investing with a low barrier to entry and gamified options trading actively enabled by a business model which, as Rep. Alexandria Ocasio-Cortez (D-NY) said at yesterday’s hearing, masks the real price investors pay to trade.  We have a Truth-in-Lending Act and a Truth-in-Savings Act because of the vital importance of true-cost disclosures about these financial services.  In this new era, we also need a Truth-in-Investing Act.  If we don’t get one, AOC’s alternative – mandatory earnings splits with investors – might well advance.  Where there’s an urgent need, a solution – no matter how costly – will be found.

It is also correct that fintech can significantly increase trading efficiency and, at least for persons without disabilities, also its accessibility.  However, another important moment at yesterday’s hearing came when Rep. Casten (R-IL) played a recording of Robinhood’s customer-service message which essentially said that there isn’t any customer service even in the event of total system malfunction or lost funds.

I’ve written before about the vital importance of customer safeguards in retail finance, pointing at the time to PayPal’s devil-may-care approach to lost funds and fraudulent transactions.  But, at least Venmo transfers are usually small.  Lured by the efficiency and accessibility of online trading, investor bets are all too often an investor’s sole asset.

Brokerages have a moral obligation to safeguard these funds and guide investors through rough patches.  If they don’t honor this moral obligation – and Robinhood clearly hasn’t – then we also need statutory requirements akin to those across the array of retail-banking and -payments laws requiring resilient systems and customer protections.

These suggestions are on a different track than all the talk of short-selling and payment-for-order-flow, not because I’m necessarily opposed to reforms, but because these types of reforms will do little to repair what’s really wrong with Robinhood.  It’s not zero-commission trading or access to fractional shares or even easier access to high-risk options (although the last should come with the same disclosures that come with taking high-risk drugs). Rather, the real problem with inclusive equity investing is that it’s only inclusive for the venture capitalists who want into a still more exclusive club of the ultra-rich.  We’ve a lot of safeguards built into retail banking for a reason.  They were omitted from retail investing because, when interest rates offered a living return, retail investors generally bet with extra cash.  Now, it’s all the cash they’ve got.  Chalk one more up for the inequality impact of ultra-low rates, but also note the urgent need for revised financial rules that reach through the range of new retail financial services.