Day two of the markup of the Financial Choice Act of 2017, the bill to torpedo Dodd-Frank, included a spirited debate about the provision of the bill that basically repeals the Labor Department’s fiduciary rule and allows the Securities and Exchange Commission to move first in issuing its own.
However, as Rep. Al Green, D-Texas, argued during the Wednesday markup held by the House Financial Services Committee, the SEC “refuses to get in the game” and issue its own fiduciary rule.
Issuing and finalizing a uniform fiduciary rule is what industry groups pressed newly christened SEC Chairman Jay Clayton, who was confirmed by the Senate on May 2, to put high on his list of priorities.
Markup of the Choice Act started on Tuesday. A spokesman for House Financial Services Committee Chairman Rep. Jeb Hensarling, R-Texas, told ThinkAdvisor that “we’ve expected [the markup] will take a couple of days to get through.”
Meanwhile, litigation surrounding the Obama-backed rule continues. The nine groups fighting the fiduciary rule in a Texas court sent on Tuesday their opening brief in their appeal to the U.S. Court of Appeals for the 5th Circuit.
The Texas judge overseeing the lawsuit filed by nine plaintiffs — which includes the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute — against Labor’s fiduciary rule denied on March 22 an emergency request by the groups to stop the rule from taking effect while they take their case to the appeals court.
During the Wednesday markup of the Choice Act, Rep. Bill Huizenga, R-Mich., noted his support of the bill’s provision calling to “delay” Labor’s fiduciary rule until the SEC “can propose a rule, and then the DOL can harmonize [its rule] with that.”
Huizenga cited a recent study by the American Action Forum stating that Labor’s fiduciary rule has “affected 92,000 investment advisors, $190 billion in assets, and at least 2.3 million consumers,” and has racked up $31.5 billion in compliance costs.
The Financial Services Roundtable, in a Wednesday letter to the Treasury Department, also urged the administration to “oppose the implementation” of Labor’s “current fiduciary rule and work to replace that rule with a ‘best interests standard’ adopted by the SEC and state insurance regulators.”
FSR’s letter is in response to President Donald Trump’s Executive Order 13772, which directs Treasury to conduct an assessment of the extent to which the regulation of the U.S. financial system is consistent with a set of core principles.
Lawmakers are already pressing new Labor Secretary R. Alexander Acosta to “conduct and finalize an exhaustive review of the final fiduciary rule before any part of the rule becomes applicable” on June 9, pursuant to Trump’s Feb. 3 executive order.
Rep. Phil Roe, R-Tenn., a member of the House Committee on Education & the Workforce, led a May 2 letter to Acosta calling for a “permanent delay” of Labor’s fiduciary rule.
--- Check out Former Fed Chair Bernanke Is Worried About a Dodd-Frank Rollback on ThinkAdvisor.