A bill meant to stall the Labor Department's overhaul of investment advice standards for brokers serving retirement accounts is set to clear a hurdle in the House of Representatives this week.
Representative Ann Wagner, R-Mo., one of the leading congressional opponents of the DOL's fiduciary proposal, said Sunday night that the Retail Investor Protection Act, of which she's a sponsor, will pass the House Financial Services Committee on Wednesday.
The next step for the bill, also known as H.R. 1090, would be a vote on the floor of the House.
“My bill this week is in the House Financial Services Committee and will be passing,” Ms. Wagner said at the Insured Retirement Institute's annual summit in Charleston, S.C. “My hope is that Democrats will be willing to take a stand against this harmful proposal and support the bill.
“We'll probably get it to the floor" of the House, Ms. Wagner said. “The question will be how much support across the aisle?”
The bill would prevent the DOL from moving ahead with its regulatory effort until after the Securities and Exchange Commission issues its own fiduciary rule governing all retail investment advice. That would effectively kill the DOL's rule, as SEC Chairwoman Mary Jo White has indicated the SEC, while actively working on it, isn't close to issuing any such proposal.
The president has been a supporter of the fiduciary rule — which would require brokers working with 401(k) and individual retirement accounts to act in their clients' best interests — under his “middle-class economics” initiative.
Although Democrats
seem willing to stand with the Obama administration, they've been calling on the Labor Department to modify parts of the rule. Last week,
96 Democrats sent a letter to Labor Secretary Thomas Perez calling for changes before the rule becomes final.
“Unfortunately, the DOL doesn't seem to be listening, and frankly, more letters from Congress aren't going to change the outcome,” Ms. Wagner said. “That's why Congress needs to take a very strong stand and pass my legislative solution.”
Ms. Wagner derided the DOL proposal in much the same way she and other opponents have attacked it in the past months, lamenting that it would hurt low- and middle-income investors most severely by depriving them of access to investment advice. Critics believe the rule would significantly increase liability risks and regulatory costs for brokers, and
make giving and receiving advice more expensive.
Proponents of a fiduciary standard say it is necessary to reduce conflicts of interest for brokers that can lead them to put clients in high-fee products that erode their retirement savings.
Ms. Wagner said her bill “is the best way forward” to halt the DOL, but explained that if that route falls flat, there's still the option of defunding the rule through the appropriations process.
“It is difficult to attach legislative riders to any kind of short-term [continuing resolution], and for that reason it is more likely that such an appropriations play, if necessary, would happen after this year, when a longer-term funding bill could potentially be considered,” Ms. Wagner said.
It's unclear what effect
Speaker John Boehner's resignation announcement last week will have on Ms. Wagner's plans for a floor vote. The Speaker of the House decides what bills reach the floor and when. Mr. Boehner is vacating his position at the end of October.
