House Democrats try to protect DOL fiduciary rule from repeal in Dodd-Frank overhaul bill
More than two hours of debate brings up old arguments from both Democrats and Republicans over whether rule will help or hurt the middle class.
A House panel was poised to stop a Democratic effort on Wednesday to remove a provision of financial reform legislation that would kill the Department of Labor’s fiduciary rule.
During a House Financial Services Committee markup of the Financial CHOICE Act, Rep. Stephen Lynch, D-Mass., filed an amendment to strike a provision of the measure that would nullify the DOL rule and prohibit the agency from promulgating its own regulation until the Securities and Exchange Commission has proposed an investment-advice regulation.
The debate over Mr. Lynch’s proposal continued for more than two hours on Wednesday morning. A vote was postponed until later in the day. The amendment will almost certainly fail because the committee’s Republican majority opposes it.
The committee was working on the CHOICE Act, written by Chairman Jeb Hensarling, R-Texas, while the DOL rule is undergoing a review ordered by President Donald J. Trump that could result in the modification or repeal of the regulation.
Although the outcome of Mr. Lynch’s amendment was preordained, Democrats used the opportunity to defend the DOL rule, which would require financial advisers to act in the best interests of clients in retirement accounts.
“The Department of Labor has done the righteous thing,” said Rep. Al Green, D-Texas.
Democrats on the panel said that the DOL rule is needed to protect workers and retirees from conflicted advice that results in the sales of inappropriate high-cost investments that erode retirement savings.
On the other side, Republicans argued that the DOL rule is too complex and costly and will force financial advisers to drop investors with modest retirement accounts.
Rep. Bill Huizenga, R-Mich., countered Mr. Green by using an example of people who are just starting to save. He said they would pay more for advice if they were placed in fee accounts rather than paying a commission on sales.
“How is it righteous to force a young couple to pay $100 for advice…instead of $10,” Mr. Huizenga said.
Mr. Huizenga, chairman of the capital markets subcommittee, added that the DOL rule would result in middle-income savers being “forced into using robo advisers at best and getting no advice at worst.”
Democrats, who stuck together earlier in the week to prevent a rider in a government funding bill that would have killed the DOL rule, didn’t give quarter to Republican claims about helping small investors.
“The [DOL] rule will have a positive impact on middle-class families,” said Rep. Carolyn Maloney, D-N.Y.
Rep. Maxine Waters, D-Calif., and ranking Democrat on the committee, said that the DOL rule is exactly the kind of regulation that shows the government trying to help many Americans targeted by Mr. Trump during his campaign. She warned Republicans that they were abandoning those voters.
“I just hope their constituents are listening,” Ms. Waters said, as she flipped a piece of paper for emphasis.
Republicans were just as passionate in portraying the DOL rule as overreaching bureaucracy.
“I believe in the American people, not in government,” said Rep. Ann Wagner, R-Mo. “This is about Main Street USA, not about Wall Street.”
Ms. Waters wrapped up the discussion of Mr. Lynch’s amendment with an observation that likely drew bipartisan agreement.
“This has been a spirited debate,” she said.
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