Donald Trump’s stunning victory over Hillary Clinton to become the next president of the United States — as well as a GOP majority in both chambers of Congress — could spell the end of the Department of Labor’s fiduciary rule, as well as what amounts to repeal of the Dodd-Frank financial reform law via the Financial CHOICE Act.
Ron Rhoades, an attorney who leads the financial planning program at Western Kentucky University, opined in a Wednesday morning blog post that he anticipates the DOL’s fiduciary rule, along with the rule’s best interest contract exemption (BICE), to be “halted” in early 2017. He also sees the Securities and Exchange Commission’s authority to adopt its own rule under Section 913 of the Dodd-Frank Act being “repealed.”
Even if the SEC’s fiduciary authority is not repealed, Rhoades said, a newly constituted SEC is “highly unlikely” to move ahead with its own fiduciary rule.
Rhoades opined that while the “application” of the fiduciary principle will remain intact, “the battlegrounds have merely shifted — at least for the next four years” to the marketplace and to professional organizations implementing a fiduciary standard.
Knut Rostad, president of the Institute for the Fiduciary Standard, was more optimistic, stating Wednesday morning that Trump’s victory does not necessarily doom DOL’s fiduciary rule as Wall Street opposition to the rule “has weakened. The thundering herd has embraced it.”
Rep. Jeb Hensarling, R-Texas, chairman of the House Financial Services Committee, said in late September that his Financial CHOICE Act that seeks to replace Dodd-Frank and kill DOL’s fiduciary rule will likely move to the House floor for a vote after the election, and that Trump supports the legislation.
“In my conversations with Mr. Trump, he and I share the view that Dodd-Frank has not led to economic growth in America, and we agree on” the CHOICE Act, Hensarling said in late September. Hensarling was overwhelmingly reelected to his 5th district House seat on Tuesday.
Rep. Jeb Hensarling, R-Texas, heads the Financial Services Committee. (Photo: AP Images)
The Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act (CHOICE) would block the Labor Department from implementing its new fiduciary rule by incorporating into the bill Rep. Ann Wagner’s Retail Investor Protection Act, H.R. 1090, which passed the House last year and requires the SEC to move first on a fiduciary rulemaking before DOL can implement its fiduciary rule. Wagner, R-Missouri, also handily retained her House seat in Tuesday’s voting.