Provision to kill DOL fiduciary rule left out of funding bill
Democratic support could bode well for future legislative threats, as critics of the rule turn their attention to new Department of Labor secretary Alexander Acosta.
Former British Prime Minister Winston Churchill once said that there’s nothing more exhilarating than being shot at and missed. By that standard, supporters of the Department of Labor’s fiduciary rule must be feeling downright giddy.
A provision to kill the rule was kept out of a $1.07 trillion bill lawmakers agreed to over the weekend to fund the federal government through the end of September. Republican lawmakers had been pushing to add the measure, but Democratic leaders in the House and Senate refused to allow so-called “posion pill” riders. The spending bill is likely to be approved later in the week.
“It’s always a huge relief when the rule dodges another threat,” said Micah Hauptman, financial services counsel at the Consumer Federation of America, which has supported the DOL rule.
The budget negotiations were another example of the partisan divide on the DOL regulation, which would require financial advisers to act in the best interests of their clients in retirement accounts.
“I think it’s unfortunate the rule has become a partisan issue,” said Maureen Thompson, vice president of public policy at the Certified Financial Planner Board of Standards Inc. “We do appreciate the Democratic unity that has been obvious on the rule. The legislative threats are always going to be there.”
At the moment, there are two bills that target the DOL rule. One, written by Rep. Joe Wilson, R-S.C., would delay implementation of the rule for two years. A second bill, one that would overhaul the Dodd-Frank financial reform law includes a provision that would kill the DOL rule and force the agency to wait until the Securities and Exchange Commission proposes its own fiduciary regulation before returning to its own measure.
Congressional Democrats’ willingness to stop the funding rider could indicate that those and other pieces of legislation would have to overcome a filibuster in the Senate.
“Every time that the Democrats stand firm against threats, they seem to be successful,” Mr. Hauptman said. “As long as they continue to stand firm, it’s encouraging.”
The demise of the appropriations rider means that attention shifts back to the Department of Labor, which has delayed implementation of the rule until June 9. The agency is conducting a reassessment of the regulation, which was ordered by President Donald J. Trump in a Feb. 3 memo, and could decide to modify or repeal it.
Financial industry opponents of the rule are pushing Labor secretary Alexander Acosta to extend the delay. They are incensed that two provisions — one expanding the definition of who is a fiduciary to retirement accounts and the other establishing impartial conduct standards — are slated to go into effect on June 9, while the agency completes its review over the balance of the year.
Mr. Acosta, the former dean of the Florida International University law school and a former U.S. attorney, was sworn into office on April 28. So far, the industry trade associations have not received a response from Mr. Acosta.
On April 28, Sen. Lamar Alexander, R-Tenn. and chairman of the Senate Health Education Pensions and Labor Committee, and eight other GOP senators sent a letter to Mr. Acosta asking him to “finalize an exhaustive review of the final fiduciary rule before any part of the rule becomes applicable.”
In a brief meeting with agency employees hours after he officially became secretary on April 28, Mr. Acosta said that his message to DOL staff “was one of mutual respect, one of listening. That’s how we reach solutions.” He did not discuss specific policies.
For now, the DOL will be the center of the battle over the rule.
“I expect to see quite a bit of activity at the Department of Labor,” Ms. Thompson said.
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