A House committee Thursday approved along party lines a resolution that would kill the Labor Department's recently finalized rule to raise investment advice standards for retirement accounts.
The vote, 22-14, in the House Education and the Workforce Committee illustrates the steep hill Republican opponents must climb to scuttle the measure, as it now moves to the House floor. Democrats appear to be staying united behind the regulation and therefore wouldn't contribute to the supermajority of votes Congress would need to override an almost certain veto from President Barack Obama, if the resolution makes it to his desk.
One of the most vocal Democrats in expressing reservations about the proposed rule, Rep. Jared Polis, D-Colo., told reporters after the vote that the modifications the DOL made to the final rule have eased worries among Capitol Hill Democrats.
“The final version of the rule incorporates most of the concerns and addresses many of the questions that we expressed through our letters to the secretary,” Mr. Polis said, referring to DOL Secretary Thomas Perez.
Mr. Polis was one of
nearly 100 Democrats who wrote a letter last year calling for changes to the rule. In addition, more than a dozen Senate Democrats wrote to DOL.
(More: Coverage of the DOL rule from every angle)
Republicans are advancing the resolution under the Congressional Review Act, which gives Congress 60 legislative days to block a rule after it has been released in final form. A similar resolution was
introduced earlier this week in the Senate.
The final DOL regulation was
launched on April 6.
The congressional resolution of disapproval will likely pass the full House with nearly unanimous support from the Republican majority. It also is likely to get through the Senate, which also has a GOP majority, because it cannot be filibustered by Democrats.
But Mr. Obama, who says the DOL rule will protect middle-class savers from conflicted advice that erodes their nest eggs, will almost certainly veto the resolution. Congressional Republicans don't seem to have enough Democratic support in the House and Senate to override a veto.
The vote in the House committee demonstrated that congressional Democrats are not inclined to buck a Democratic president who has made the DOL rule a priority.
Rep. Bobby Scott, D-Va., ranking member of the House Education and the Workforce Committee, accused Republicans of rushing the resolution through the legislative process. Mr. Scott noted that the resolution was getting a committee vote only 13 days after the final DOL rule had been published. He said that beats the previous record for congressional consideration of a regulatory disapproval measure, which was 25 days.
“This hastily conceived, partisan resolution should not be where the committee is allocating its time and resources,” Mr. Scott said.
Republicans did not want to waste time in trying to stop what they call a complex, costly regulation that would make investment advice too expensive for investors with modest assets.
“The final rule does include some modest changes that will no doubt appease a few detractors, but make no mistake, the rule is still fundamentally flawed and harmful to those saving for their retirement,” said Rep. John Kline, R-Minn., and chairman of the House Education and the Workforce Committee.
He added: “The department's final rule will still encourage frivolous lawsuits and drive up the costs for those who can least afford it.”
His arguments align with those of the financial industry.
“We are open to anything that is going to improve this rule,” said Jill Hoffman, vice president of government relations for investment management at the Financial Services Roundtable, who attended the committee vote Thursday. “There are still fundamental flaws in what [DOL is] trying to accomplish.”
But most industry trade groups are holding their fire as they and their members review the final DOL rule, which runs more than 1,000 pages.
“Every firm is trying to figure out how to make it work,” Ms. Hoffman said.
