[Update: Robert Litan has now resigned from the Brookings Institution]

Wall Street’s domination of Washington continues. According to The Washington Post, Senator Elizabeth Warren wrote letters to both the Labor Department and the Brookings Institution concerning a Brookings report that opposed a regulation on the financial services industry sought by the Labor Department regarding disclosing conflicts of interest for retirement investment advice.

The authors of the Brookings report received $85,000 from The Capital Group, a financial services firm with $1.4 trillion under management and a clear interest in opposing the regulation. One of the authors, Robert Litan, admitted he showed the report to The Capital Group and received comments from the Wall Street firm before publication.

The ironic conflicts of interest on a report opposing a rule on conflicts of interest led Senator Warren to call the report “highly compensated and editorially compromised work on behalf of an industry player seeking a specific conclusion.” That, in essence, Brookings was shilling for Wall Street under the guise of disinterested scholarship.

Litan pushed back against Warren’s criticism and said he made the appropriate disclosures concerning the report and The Capital Group. However, Litan did admit to not following a Brookings rule that prevents non-resident scholars like himself from associating their congressional testimony with Brookings.

Litan testified in opposition to the rule before Congress in July of this year citing his Brookings Institution connections to bolster his credibility despite the rule on non-resident scholars and congressional testimony. Brookings Institution spokesman David Nassar said Litan was acting in a “private capacity” when testifying before Congress.

While the battle over the conflicts of interest regulation rages behind the scenes in D.C., the efficacy of the rule is easy to see. Investment advisors are often given hidden compensation for pushing their clients into certain investment products from the providers of those products. That practice creates a clear conflict of interest as an investment advisor is more likely to steer clients asking for retirement investment advice into investment products that lead to rewards for the advisor. That incentive structure compromises an investment advisor’s objectivity in pursuing their client’s best interest.

By forcing a disclosure of these conflicts of interest, investment advisors will have to focus more on generating income by providing better investment advice rather than getting paid with kickbacks from those peddling investment products. And, of course, those selling investment products will be more reliant on their performance rather than giving out hidden rewards to generate business.

It is rather illuminating both that Wall Street so vehemently opposes such a disclosure and that allegedly public-spirited think tanks such as the Brookings Institution are lending Wall Street their name to help stop it.