The House spending bill that passed Wednesday and included an amendment that would bar the Securities and Exchange Commission (SEC) from using federal money to write a rule to put brokers under a fiduciary mandate is likely dead on arrival in the Senate — and would likely be vetoed by the Obama Administration.
It’s “unlikely that the Senate will agree” to the amendment by Rep. James Lankford, R-Okla., which passed on a voice vote on the House floor. An even if the Senate did pass it, that “might provoke a presidential veto,” David Tittsworth, CEO of the Investment Adviser Association, told our sister publication, ThinkAdvisor.
Tittsworth chalked the amendment up to “another attempt by the brokerage and insurance industries to do whatever they can to make sure that investors are not protected by the Investment Advisers Act fiduciary standard.” Lankford argued that “This (proposed standard) will provide a disincentive to provide retirement vehicles for Americans on the lower and middle end of the income scale.”
Indeed, Tittsworth said that IAA would “continue to work with state securities regulators, investor advocates and other industry groups who support the fiduciary standard to ensure that the Senate will reject this ill-advised language when it takes up the SEC appropriations bill.”
The Senate Appropriations Committee has not yet scheduled a vote on its spending bill, and Congress is set to adjourn soon for a month-long August break.
Tittsworth opines that it’s likely that the Senate will not move forward with any appropriations bills “due to a standoff” between Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., about “rules governing consideration of those bills.”
“A lot of knowledgeable folks are predicting that the House and Senate will adopt a short-term continuing resolution just before the federal fiscal year ends on Sept. 30 and that an omnibus appropriations bill would then be considered in November, after the mid-term elections,” Tittsworth says.
The GOP-controlled House also voted in its spending bill, H.R. 5016, to give the Securities and Exchange Commission $1.4 billion in fiscal 2015 — $50 million more than the agency’s fiscal 2014 enacted level but $300 million less than the amount requested by President Barack Obama. The Senate Appropriations Subcommittee recently approved Obama’s full budget request of $1.7 billion for the SEC.
"The regular appropriations process looks like it is stalled in the Senate," Tittsworth says. "Unless and until that changes, continuing resolutions — that roll up multiple spending bills into a single package — will likely be the way forward."