H.R. 1090, a bill sponsored by Rep. Ann Wagner (R-Missouri) that would yank the reins on the DOL’s fiduciary rule, passed the House Tuesday afternoon after extended commentary from a long list of representatives. “I refuse to stand by and let Pres. Obama advance another regulation that takes away Americans’ ability to save,” Rep. Wagner said on Twitter on the day of the vote.
Lawmakers voted along clear party lines, with just three Democrats—David Scott (D-Georgia), Kyrsten Sinema (D-Arizona) and Brad Ashford (D-Nebraska)—voting in favor and one Republican—Walter Jones (R-North Carolina)—voting against.
The Obama Administration has already registered its support of the DOL initiative, and the White House on Monday released a statement in advance of the vote, plainly stating that if President Obama were presented with the bill, his senior advisers would recommend a veto. It’s also still unclear what the bill’s prospects are in a Senate viewed as somewhat more friendly to the president’s policies.
H.R. 1090 prohibits the DOL from issuing a new conflict of interest rule applying under the Employee Retirement Income Security Act (ERISA) until the Securities and Exchange Commission (SEC) moves forward on its own rulemaking that would apply more generally to brokers and advisers.
According to the Obama Administration, “[H.R. 1019] also impinges on the SEC’s ability to move forward with its own rulemaking by requiring the SEC to take the misguided step of providing definitive findings before promulgating a rule. Further, the bill ignores the fact that significant study has already been conducted by both agencies and that Labor has had extensive engagement with the public, industry, and numerous stakeholders in its rulemaking process.”
Industry response seems to be generally positive towards H.R. 1090, with two advocacy organizations—the Investment Company Institute (ICI) and the Insured Retirement Institute (IRI)—quickly releasing statements applauding the measure and expressing concern that the the fiduciary proposal of the Department of Labor (DOL) would limit investor access to advice.
Agreeing that “financial advisers should act in the best interests of their clients at all times,” Paul Schott Stevens, president and chief executive of the ICI, registered disapproval with the fiduciary proposal in a statement, saying if it were adopted in its current form, “it would do great harm.” The sensible goal of H.R. 1090 would encourage federal agencies to adopt “a harmonized fiduciary duty for all investors,” Stevens said, without jeopardizing investor access to personalized, cost-effect investment advice. “Simply put, H.R. 1090 reflects a strong purpose … to get the fiduciary rules right,” he said.
Cathy Weatherford, president and chief executive of the IRI, said the vote emphasizes deep concern with the fiduciary proposal. “Members of Congress in both chambers, on a bipartisan basis, have written letters to the DOL expressing concern that the proposal will restrict retirement savers’ access to retirement planning advice and limit their choice on retirement products, including lifetime income strategies that help Americans ensure their savings last throughout all their retirement years,” she said in a statement.