During a visit to Chicago on Thursday, Labor Secretary Thomas Perez shrugged off the multiple lawsuits against the Department of Labor on its fiduciary rule, saying “DOL gets sued with some degree of frequency,” and pointed out the recent Home Health Care lawsuit that the Supreme Court opted not to review this week.
“I appreciate the right that people have to file lawsuits, [but] have every confidence we will succeed,” he said. “I have confidence because not only is [the rule] a solid product, but a product that’s a result of a very robust process.”
He said the DOL worked closely with the industry in revising its draft fiduciary rule, and in fact, was ‘thanked’ by them, he said, for listening to their requests for changes when the new rule was issued. “Some folks in industry want a Best Interest Rule as long as it’s not enforceable. I don’t think it makes sense to allow them to put out marketing material without that material being enforceable. We’re now in a court of law with those cases and I’m confident we’ll prevail.”
Along with other politicians such as Sen. Richard Durbin, D-Ill., and Illinois State Treasurer Michael Frerichs, Perez took a tour of the Center for Economic Progress, the brainchild of mutual fund manager and CEO of Ariel Investments John Rogers, and then held a roundtable to get insights from the Center’s staff and volunteers.
Perez called the team “heroic figures” and noted how impressed he was with the work of the agency, especially in raising the FICO scores of some of the Center’s clients. The Center provides financial literacy training, free tax preparation and other financial services to low-income families.
Returning to the theme of the DOL fiduciary rule, Perez said “I’m very proud of the Conflict of Interest rule,” because “it touches a subset of people you were talking about [at the Center]. The flip side of compound interest is a nightmare: fees added to decision-making, and fees that aren’t in your best interest, but [instead] for the people giving the advice.” Asked whether he agreed with the comments yesterday of Assistant Secretary Phyllis Borzi that the new rules still needed some “tweaking,” Perez all but shrugged. “We continue our outreach with industry and other stakeholders on the rule,” he said. “In the history of rules issued by DOL, frequently issues arise” around provisions that may have “appeared clear at first blush but [are] creating ambiguity, so this is a regular part of the regulatory process where you put out a rule [after] a robust comment period and finalize the rule and you continue that outreach.”
Perez said at DOL “we continue to learn and guidance can be issued to clarify certain things. We will take that under advisement.” He said the timing on guidance releases would depend on the specific issues that arise.
Perez applauded the Center and Rogers for helping improve its clients’ financial literacy, but also teaching them to be able to handle day-to-day tasks like balancing a checkbook and how to build a savings plan, giving them confidence in handling their financial world.
“The U.S. leads in so many things, but in financial literacy we have work to do because global survey found we’re ranked about 14th on financial literacy,” Perez said. So he said the question becomes, “How do we scale and sustain the great work you’re doing here?”
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