[Update since the story published: The bill did pass the House on Tuesday on an almost party-line vote, 245-186, with only three Democrats voting for it and two Republicans voting against it.]
Legislation that would block a Labor Department proposal to raise investment advice standards for retirement accounts was on the verge of passing the House on Tuesday — with a veto threat waiting in the wings.
The House began debate in the early afternoon on the bill that would force the DOL to halt its fiduciary rule until the Securities and Exchange Commission acts on a similar requirement for retail investment advice. The measure, which was written by Rep. Ann Wagner, R-Mo., likely will secure enough support for passage among the Republican majority during a vote expected later today.
“The SEC ought to be acting in this area; that is their primary role,” said Rep. Ander Crenshaw, R-Fla., during floor debate. “It's a common sense piece of legislation.”
The legislation has drawn a veto threat from the Obama administration, which supports the DOL proposal.
“The administration strongly opposes [the Wagner legislation] because the bill would derail an important Department of Labor rulemaking critical to protecting Americans' hard-earned savings and preserving retirement security,” the Office of Management and Budget said in
an Oct. 26 statement.
Introduced in April,
the DOL rule is designed to reduce conflicts of interest for brokers working with 401(k) and individual retirement accounts. Supporters say the rule would protect investors from high-fee products that erode retirement savings. Opponents assert it will significantly increase liability risk and regulatory costs for brokers, making giving and receiving advice more expensive.
When Ms. Wagner introduced a similar measure in 2013, it drew the votes of 30 Democrats in a floor vote. But this time around, Democrats who previously supported the legislation have abandoned it.
Rep. Gwen Moore, D-Wisc., has raised concerns about the DOL rule. But she said she changed her mind on Ms. Wagner's bill because the DOL held approximately 100 meetings with consumer and industry groups and has taken two rounds of comments. She has expressed confidence that the agency will improve the proposal before it is finalized, likely in the first few months of next year.
“The SEC has yet to begin to undertake a related rulemaking five years after the DOL began the process, so requiring the DOL to wait until after the SEC acts to issue a rule would only delay these important consumer protections,” Ms. Moore wrote in
a letter to colleagues Tuesday. “At this point, Congress needs to partner with DOL, industry and retirement savers toward the best possible final rule to protect and encourage retirement savings.”
In addition to the veto threat from the White House, another obstacle is that no Senate champion of the bill has yet emerged.
“Our expectation is that the bill will not get significant Democratic support [in the House], and that lessens the chance it will be taken up in the Senate,” said Barbara Roper, director of investor protection at the Consumer Federation of America.
A larger threat to the DOL rule is a possible amendment — known as a rider — to funding legislation that must pass by Dec. 11 to keep the government open. A bipartisan budget agreement introduced Tuesday that sets spending limits and raises the debt ceiling did not include so-called riders. But they could pop on the bill in December that funds specific agencies.
