The full House passed by a 245-186 vote late Tuesday Rep. Ann Wagner’s bill to stop the Department of Labor from moving forward on its rule to amend the definition of fiduciary on retirement advice.
Wagner’s bill, H.R. 1090, the Retail Investor Protection Act, was voted out of the House Rules Committee Monday evening. The bill passed out of the House Financial Services Committee on Sept. 30 by a 34-25 vote, with less Democratic support than the version of the bill floated in 2013.
Despite the fact that Wagner’s bill passed the full House, the Senate has shown no interest in taking up its own version of the Missouri Republican’s bill, and the Obama administration said Monday that it would veto Wagner’s bill.
In a Monday statement, the Office of Management and Budget said the administration “strongly opposes” H.R. 1090 because the bill “would derail an important DOL rulemaking critical to protecting Americans’ hard-earned savings and preserving their retirement security.”
Wagner said after the Tuesday vote that the House voted to stop DOL from “issuing a 1,000 page rule on retirement savings that will prevent countless Americans from accessing financial advice.” The House, Wagner said, “stood up for low- and middle-income investors today” by passing the Retail Investor Protection Act. “The Obama administration and the Department of Labor believe that the American people need to be protected from themselves, that they are not smart or capable enough to control their own retirement savings.”
Paul Schott-Stevens, president and CEO of the Investment Company Institute, stated after the vote that H.R. 1090 “reflects a commonsense goal of ensuring that federal agencies work to adopt a harmonized fiduciary duty for all investors, and that they do so in a manner that does not jeopardize investor access to personalized and cost-effective investment advice. Simply put, H.R. 1090 reflects a strong purpose—one shared by ICI—to get the fiduciary rules right.”
Central to Tuesday’s debate was an amendment put forth by Rep. Steven Lynch, D-Mass., which calls for replacing the bill’s existing requirement that DOL stop its rulemaking pending a final Securities and Exchange Commission rule with a requirement that the SEC revise “its own regulations governing fiduciary duty no later than 60 days after the DOL finalizes its rule and coordinates its rulemaking with the DOL.”
House Minority Leader Nancy Pelosi sent a letter Monday urging her fellow Democrats to “vote NO” on Wagner’s “misguided legislation.” Pelosi said Wagner’s bill “undermines President Obama and [Labor] Secretary Perez’s efforts to protect the retirement security of millions of Americans.”
The big unknown, according to industry lobbyists and lawyers reached by ThinkAdvisor, is whether a final budget bill compromise would include riders–added to House and Senate appropriations bills–that would defund DOL’s fiduciary rulemaking.
“It is possible that the appropriations bills – either separately or as part of a continuing resolution – may include the language,” says David Tittsworth, the former president and CEO of the Investment Adviser Association who’s now counsel with Ropes & Gray. “But it seems very unlikely that there would be enough votes in both the House and the Senate to override the president’s probable veto of any of these measures.”
Former Sen. Don Nickles, R-Oklahoma, said during a Bipartisan Policy Center event in Washington Tuesday to discuss the budget deal that there “should be a rider” attached to an appropriations bill to defund DOL’s rulemaking. ”I don’t like executive branch legislation,” he said. “I wouldn’t be a bit surprised, ” he said, if there is a rider.