No limelight, just labor

House Financial Services Committee Chairman Barney Frank, D-Mass., gets most of the attention on banking and securities issues, but the committee's second-ranking Democrat, Rep. Paul Kanjorski, is the one handling the issues most important to financial advisers.
DEC 13, 2009
House Financial Services Committee Chairman Barney Frank, D-Mass., gets most of the attention on banking and securities issues, but the committee's second-ranking Democrat, Rep. Paul Kanjorski, is the one handling the issues most important to financial advisers. The 13-term Pennsylvania congressman, chairman of the Capital Markets, Insurance and Government Sponsored Enterprises Subcommittee, this year took on the job of writing and wrangling the proposed Investor Protection Act, which, among other things, would direct the Securities and Exchange Commission to write rules imposing a universal fiduciary standard on investment advisers and brokers providing investment advice. The act also would give the SEC the power to bar mandatory arbitration clauses in investor contracts, double authorized funding for the SEC over five years, and in an attempt to improve the SEC's ability to inspect advisory firms more frequently, impose fees on adviser firms to cover the cost of SEC inspections and examinations. The bill doesn't satisfy advisers, who are nervous that the provision instructing the SEC to write new fiduciary standards for the industry would favor brokers by weakening rules for fiduciary standards. Instead, advisers' groups are rallying behind a competing proposal put forward by Senate Banking Committee Chairman Christopher Dodd, D-Conn., that would require brokers giving advice to register as investment advisers. Fiduciary standards would remain unchanged under that approach.
Next year, assuming that the Senate passes its own bill, Mr. Kanjorski will be part of the conference committee detailed to reconcile the two versions. In those deliberations, he will be “somebody that will be looked to because of his position, if nothing else, as a resource about these issues,” said David Tittsworth, executive director of the Investment Adviser Association, which supports the Senate draft. Other legislation of Mr. Kanjorski's that advisers will be interested in next year includes a bill establishing a federal regulatory presence for the insurance industry. Getting it passed is no small task, given the determination of state regulators and legislators to block a federal role and hold on to control of insurance regulation. The Federal Insurance Office Act of 2009, which the Financial Services Committee passed Dec. 2, would create an office within the Treasury Department that would provide information on the insurance industry to federal policymakers. It would also have the power to override state regulations if they interfered with international treaties. The insurance industry has long favored a single federal regulator, but the creation of this office does not go as far as the industry would like. It would, however, get the camel's nose under the tent by starting down the path of federal regulation, and Mr. Kanjorski's international-treaty pre-emption provision is important since the insurance business, like all financial services, is increasingly international in scope. ”He's been a very good champion for the insurance industry,” commented Kim Dorgan, senior executive vice president for public policy at the American Council of Life Insurers.

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