A main congressional opponent of the Department of Labor's fiduciary rule said Thursday that Capitol Hill's swelling political agenda will decrease the priority level of taking up legislation to kill the rule.
"Right now, you've got a debt-ceiling vote coming up, a hurricane bearing down on us, … health care that hasn't been done [and] tax reform … [The fiduciary rule] will get pushed down," Rep. Phil Roe, R-Tenn., a member of the House of Representatives' subcommittee on Health, Employment, Labor and Pensions, said.
"There's just so much on the plate for everyone up there right now. There are only so many things you can focus on," said Mr. Roe, the author of a bill to kill the DOL rule and replace it with an advice standard based on disclosure. That bill
passed the House Education and the Workforce committee in July.
Mr. Roe made his comments Thursday at a U.S. Chamber of Commerce event centered on the fiduciary rule, which raises investment advice standards in retirement accounts, and on a discussion of new survey research that the Chamber, a rule opponent, believes demonstrates the negative effects of the regulation.
The Obama-era rule partially went into effect in June; many of the remaining portions are scheduled to go into effect in January, but the DOL is
trying to delay implementation until July 2019.
Rep. Ann Wagner, R-Mo., who also spoke at the Chamber event, said there are many paths forward to killing the rule, including via the courts, a new rulemaking effort and legislation, the latter being her preferred route.
"That's certainly how I intend to move forward," Ms. Wagner said, adding that she hopes her
bill to kill the rule, which is separate from Mr. Roe's, will be introduced by the end of September.
"I hope the legislation gets passed by Congress and signed by the president of the United States," she said. "If not, I believe it is a pathway, a guideline, a model for what should be done going forward."
The Chamber
research, released Thursday, surveyed 14 insurance companies, financial-product manufacturers and broker-dealers, representing nearly $10 trillion in assets under management and 26 million investor accounts, about the rule's impact.
According to the Chamber survey, because of the fiduciary rule, 13.4 million accounts have lost access to financial products, 6 million investor client accounts work with companies that are increasing fees, and 4.4 million accounts have been moved into a service not requested by the investor. These largely mirror objections brokerage and asset management firms put forth against the rule over the last several years.
"The negative impact on investor choices and access to good retirement advice, especially for smaller accounts, is even more dramatic than we expected," David Hirschmann, president and CEO of the U.S. Chamber's Center for Capital Markets Competitiveness, said in a statement. "Now that implementation has begun, this data shows that the fallout we feared is real and widespread. From escalating orphaned accounts to dramatically reduced investment options, the reasons to delay and fix this rule are piling up."
However, rule proponents call the Chamber's research flawed and opaque.
"This is just more nonsense from the Chamber," said Micah Hauptman, financial services counsel at the Consumer Federation of America. "They're so desperate to cook up 'evidence of harm' from the rule, but tellingly, the best they can come up with is more secret surveys based on conversations with unnamed industry rule opponents who have a motivation to give the Chamber the 'information' it seeks."
Phyllis Borzi, former assistant secretary of labor and the
individual who championed the rule since it was originally proposed around seven years ago, agreed.
"Until anybody sees the actual study results and the underlying data, it's hard to think of this as anything but speculative," she said.
For example, while the number of investment products made unavailable by brokerage firms because of the rule is quantifiable, the survey doesn't delve into the quality of the investment products eliminated, how popular they were with investors or what their fees were, Ms. Borzi said.
"The whole [Chamber] event assumed even losing one investment product from the marketplace was somehow a terrible problem for consumers," she said.
