A House bill introduced Tuesday would stop a Labor Department proposal to change investment advice standards for retirement accounts.
Under the
House Appropriations Committee measure, DOL would not be able to spend any funds to finalize or implement the rule. The provision is part of a $153 billion bill that would fund DOL, the Department of Health and Human Services and several other agencies for fiscal year 2016.
A House Appropriations subcommittee is expected to approve the bill Wednesday, sending it to the full panel for further action.
The so-called rider would halt the DOL initiative to reduce conflicts of interest for brokers working with clients in 401(k) or individual retirement accounts. The agency said the rule, proposed in April, is designed to prevent brokers from inappropriately putting investors into high-fee products that eat away at their retirement savings.
Critics say the rule would foist significant liability risks and regulatory costs on brokers and potentially force them to abandon investors with modest retirement accounts.
The appropriations bill rider reflects the sentiments of the majority Republicans, who, along with the financial industry, have been the leading opponents of the DOL rule.
“The legislation includes several provisions designed to help U.S. businesses create jobs and grow the economy by reducing or eliminating overly burdensome government regulations,” the House Appropriations Committee said in a summary of the spending bill.
A proponent of the DOL fiduciary rule said the appropriations tactic was expected.
“The only reason to defund the [DOL] effort is if you're prioritizing the concerns of financial firms over the very real struggles of American workers and retirees,” said Barbara Roper, director of investor protection at the Consumer Federation of America.
An attempt to attach a similar rider to last year's omnibus funding bill for fiscal 2015 failed. The full House likely will approve the appropriations bill, but it is unclear whether stand-alone funding measures will get through the Senate. Congress again may have to resort to omnibus appropriation legislation Sept. 30, when the fiscal year ends.
A provision defunding the DOL rule, however, could be attached to other legislation.
“If this rider is on a bill that the president is forced to sign, that's a real threat,” Ms. Roper said.
