The author of legislation that would halt a Labor Department rule designed to limit conflicts of interest on retirement-investment advice anticipates the measure will make it at least to the House floor and send a clear signal of Capitol Hill concern to the agency.
Rep. Peter Roskam, R-Ill. and a member of the House Ways and Means Committee, introduced the bill on Dec. 18, just before Congress began its holiday recess. It would require Congress to approve the DOL rule before it goes into effect. If Congress does not approve the rule, it would be replaced by a fiduciary standard drawn up in the legislation, which requires advisers to act in the best interests of their clients in retirement accounts and disclose conflicts, compensation and fees.
“What we've got the capacity to do is actually get something on the floor,” Mr. Roskam said in an interview Thursday. “I have a high level of confidence in the direction this is going. This will pass out of the House and be very attractive in the United States Senate.”
As he is promoting the bill, the DOL is
on the verge of sending a final rule to the Office of Management and Budget for review. After the OMB signs off, the agency will release a final rule, perhaps as early as March.
A hearing has not yet been scheduled on Mr. Roskam's bill, but he said that Ways and Means Chairman Kevin Brady, R-Texas, knows that the clock is ticking on the DOL rule.
“He has a clear understanding about the urgency,” Mr. Roskam said.
Similar legislation was introduced by Rep. Phil Roe, R-Tenn and a member of the House Education and Workforce Committee.
Mr. Roskam's measure amends the tax code, while Mr. Roe's measure amends federal retirement law.
PRESIDENT OBAMA
The bills have the support of several Democrats, including Reps. Richard Neal of Massachusetts and John Larson of Connecticut.
Lawmakers on both sides of the aisle are concerned about the DOL rule, Mr. Roskam said. He argued that its complex requirements would increase the cost of advice and end relationships between brokers and savers with small accounts.
“The agenda behind the DOL rule is ultimately to move private investment out of the retirement space,” Mr. Roskam said. “[The Obama administration] ought not underestimate the level of anxiety they're creating.”
President Barack Obama strongly supports the rule, saying that it is needed to protect workers and retirees from conflicted advice that erodes their savings.
Introduced in April, the
rule has generated thousands of comment letters and been the subject of four days of DOL hearings. The administration is pushing to get it finalized and made effective before Mr. Obama leaves office next January.
TOO LATE?
The agency is far enough along in its rulemaking process that Mr. Roskam's bill will have little effect, said Duane Thompson, a senior policy analyst for Fi360, a fiduciary duty consulting firm.
“I don't think the Department of Labor is oblivious to anything happening on the [Capitol] Hill, but this bill is too little, too late,” Mr. Thompson said. “It's a message from Congress that even though the comment period is over, we're still here; we're still watching.”
Even if the bill gets on the Senate calendar and overcomes a filibuster, it is likely to be vetoed by Mr. Obama. But Mr. Roskam remains hopeful.
“There's a possibility [of] the Obama team revisiting and having a clearer understanding of the level of concern that their own members have about this issue,” Mr. Roskam said.
The DOL has
criticized the legislative efforts, and opposing their own administration is a challenge for many Democrats.
“Democrats who may ultimately be supportive of the Roskam-Neal approach still want to see the final rule before they back any legislative remedy,” said Jason Rosenstock, a partner at Thorn Run Partners, a government relations consulting firm.
Critics say that the bills would not enforce fiduciary duty the way the DOL rule would. They maintain that Mr. Roskam and his colleagues are doing the bidding of the financial industry, which has praised their legislation and contributes to their campaigns.
Mr. Roskam dismisses the assertion.
“The financial industry didn't come to Congress and say raise the [investment-advice] standard,” Mr. Roskam said. “It is the overstatement and hyperbole of opponents who don't want to deal with the merits of a well-crafted bill.”
