WASHINGTON ( ) – Legislation to bypass the U.S. Labor Department and have Congress set standards for brokers who give retirement advice passed a major committee on Wednesday and is now headed to the full House of Representatives.
Although the bill faces slim chances of becoming law, it reveals the depth of feuding in Washington over the 2010 Dodd-Frank Wall Street reform law’s requirement that retirement advisers follow a “fiduciary” standard that puts their clients’ interests first.
The requirement aims to end potential conflicts of interest by brokers who advise on individual retirement accounts and to protect con,,sumers from buying unnecessary investment products that line brokers’ pockets.
Last week, the Labor Department sent a revised proposal for an adviser rule to the White House’s Office of Management and Budget. Details will not be made public until the White House comple,Jacklyn,tes its review. This was the department’s second stab at a r, 龙凤论坛上不去Lark,ule. Wide criticism from the industry and lawmakers alike forced it to withdraw its initial proposal in 2011.
The House Ways and Means Committee split along party lines as it debated the legislation, which would create a “best interest requirement” and lay out processes for advisers to follow.
Republicans, the majority, touted it as a workable alternative to the Labor Department’s rule, which they said could “frighten off” middle-income investors from seeking advice and give advisers incentives to work only for wealthy clients.
They took issue with how the Labor Department drafted its rule, as well, saying the first version was panned by thousands of people and complaining that the current version lacked transparency.
“Just disclose it,” said Rep. Peter Roskam, of Illinois, who helped write the bill, in comments directed at the department. “You’ve written it. It’s done. It’s not holy text.”
Democrats said lawmakers should wait to see the Labor Department’s rule before bypassing it. They also complained there were no hearings on the bill, introduced in December, and said industry pressure was behind a sudden rush to pass it.
President Barack Obama, a Democrat, would likely veto the legislation if it passed both the House and the Senate. Democrats cautioned that the bill’s major effect, then, will be to hamper negotiations lawmakers might want to have with his administration. Since the initial version was released, Democrats have raised potential problems they see in the rule with the Labor Department.