House passes bill that would kill DOL fiduciary rule
Financial CHOICE Act faces long odds in Senate. Meanwhile, House and Senate Republicans introduce stand-alone legislation to scuttle the regulation.
The House of Representatives approved legislation Thursday that includes a provision to kill the Labor Department fiduciary rule, while House and Senate Republicans introduced separate bills to stop the regulation and establish a new investment advice standard.
They all face long odds in the Senate, where Democrats have more than enough members to block legislation through a filibuster.
In a party-line vote, 233-186, the House passed the Financial CHOICE Act, a measure that would overhaul the Dodd-Frank financial reform law. It also contains language that would scuttle the DOL rule and would not allow the agency to advance a fiduciary regulation until the Securities and Exchange Commission proposes its own rule for retail investment advice.
Republican backers of the CHOICE Act see it as a way to roll back excessive financial regulations promulgated by the Obama administration. Democrats labeled it the “Wrong Choice Act,” asserting it would take important investor protections off the books, including the DOL rule, which requires financial advisers to act in the best interests of their clients in retirement accounts.
“We must stand up for retirees and reject this bill,” said Rep. Bobby Scott, D-Va.
Rep. David Scott, D-Ga., said his Democratic colleagues in the Senate will stifle the measure.
“I have talked with our senators, and they have assured me this bill is dead on arrival,” he said.
While the Financial CHOICE Act was on the House floor, GOP Reps. Phil Roe of Tennessee and Peter Roskam of Illinois introduced a bill that would kill the DOL fiduciary rule and establish a different best-interests standard that would “enhance transparency and accountability through clear, simple and relevant disclosure requirements,” according to a statement.
On the other side of the Capitol on Thursday afternoon, Sen. Johnny Isakson, R-Ga., introduced similar legislation. It would halt the DOL rule and require financial advisers to “serve in their clients’ best interests [and] … require clear communication of key information by advisers to ensure investors are well informed to make investment choices,” according to a statement.
Neither of the GOP fiduciary bills has Democratic support. Obtaining any in the Senate will be difficult, according to David Tittsworth, counsel at Ropes & Gray.
“I would be surprised if you see a compromise on a DOL-type provision anytime soon,” Mr. Tittsworth said. “You can’t just jam something through on a party-line vote the way you can in the House.”
The legislative activity came a day before partial implementation of the DOL rule begins. Two provisions of the measure will become applicable, while the agency reassesses the regulation under a directive from President Donald J. Trump that could lead to its revision or repeal. On Wednesday, Labor Secretary Alexander Acosta testified in a congressional hearing that a pending request for information will allow the agency to collect data and analyses that could become the foundation for rulemaking to change the regulation.
Senate Democrats will wait to see the results of the review before addressing the stand-alone bills to replace the DOL rule, said Jason Rosenstock, a partner at Thorn Run Partners.
“They’re not willing to rebuild the house until the house is burned down,” Mr. Rosenstock said. “Acosta is trying to take down the house slowly.”
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