If you read Melanie Waddell’s story on AdvisorOne last Friday (“House Passes SEC Cost-Benefit Bill”), you know that, well, the U.S. House of Representatives passed a bill that same day, which, should it become law, would require the SEC to conduct rigorous cost-benefit analyses on all of its future, and possibly some of its current, rules and regulations.
While the SEC Regulatory Accountability Act was passed largely by House Republicans (the 54% yeas comprised 218 Republicans along with only 17 Democrats), it might be construed as a “bipartisan” bill in that it’s an attempt to make President Barack Obama’s Executive Order 13563 into law—underscoring Wall Street’s influence with the Republicans and the administration, if not most Democrats, in Congress.
Those of us who closely follow the SEC’s drawn-out deliberations over Dodd-Frank Sec. 913, which requires the commission to establish a fiduciary standard for brokers that is “no less stringent than the existing standard for Investment Advisors,” will recognize the Accountability Act as yet another attempt by the securities industry to shift attention away from the consumer protections of requiring brokers to put the interests of their clients ahead of their own, by focusing solely on the “costs” of doing so. It’s a curious argument, to say the least, and yet one that seems to resonate in the halls of Congress as well as the White House.
As I and many others have written, one would think SIFMA, and NAIFA, and the SIA would be reluctant to admit that the brokerage business model would have a hard time surviving if brokers had to act in the interests of their clients; or that they currently don’t do what’s best for their clients because it would cost too much. And yet, that’s exactly what they’ve argued, and now have the White House and a majority of congressmen arguing the same. I suppose they hope that if they can get a bunch of politicians to echo this silliness, the public and the media might start to believe that it makes some sense.