In the News

by Peter Schroeder

The financial industry is eyeing a must-pass government funding bill as a way to stymie administration efforts to impose contentious new rules on the sector.

As lawmakers work to craft an omnibus funding bill before a Dec. 11 deadline, the industry is pushing to include an amendment that could halt, or at least slow down, a reviled rule imposing a “fiduciary duty” on retirement investment advisers.

The Obama administration has thrown its weight behind the Labor Department initiative, which would require advisers to act solely for the benefit of their client. The White House says it could save investors billions of dollars, but the industry contends it could hinder its efforts and actually limit what advice is available.

With lawmakers drafting one of the few remaining pieces of legislation certain to pass this session, interest groups and members are pushing to attach a host of policy riders to the critical legislation. The financial industry hopes a fiduciary delay makes the cut.

Industry sources eager to slow down the rule see positive signs about its chances for making it into the final omnibus package. That’s because language blocking the rule was included in appropriations bills drawn up in both chambers earlier in the year.

Subcommittees in the House and Senate passed legislation that would bar funds from being spent on the rule over the next year, effectively killing the Obama administration’s efforts to implement it.

Add to that the fact that a number of Democrats have expressed concern about earlier proposals drafted by the Labor Department.

“The best thing I can say about it is there’s strong bipartisan support. There are a lot of Democrats that have a lot of concern about this rule,” said Rep. Tom Cole (R-Okla.), who chairs the Appropriations subcommittee that oversees the Labor Department. “We all have financial advisers and different sectors of the financial services industries in our districts. … The opposition has been so uniform that I know my Democratic colleagues are hearing the same thing.”

A large number of Democrats had expressed concerns with the rule. But the big question is whether any of them would be willing to slow it down via the omnibus measure.

Democrats nearly upended a government funding bill at the end of last year when liberals led by Sen. Elizabeth Warren (D-Mass.) balked at provisions to roll back parts of the Dodd-Frank financial reform law. 

Democrats have repeatedly warned that “poison pill” riders could kill their support for the funding package, and there are indications that efforts to slow this rulemaking might be one.

Rep. Gwen Moore (D-Wis.) garnered signatures from more than half of House Democrats in September on a letter criticizing the Labor Department’s efforts. But her office told The Hill Tuesday that she would not back a measure to slow the rule through the omnibus.

“The Congresswoman does not support the rider — or any — in the omnibus,” said Eric Harris, her spokesman.

Instead, Harris said, Moore has been satisfied with the administration’s efforts to rework the rule and now wants to see the Labor Department move forward.

And the White House has indicated it would oppose efforts to slow the rule through the omnibus bill. White House press secretary Josh Earnest told reporters Tuesday the administration would “aggressively oppose” efforts to water down the rule in the funding bill.

Backers of the new rule are hopeful Democrats who have said they would oppose contentious riders in the package will stick to that message when it comes to fiduciary rule.

“Will Democrats desert their president, desert their ‘no policy rider’ stand?” asked Barbara Roper, director of investor protection for the Consumer Federation of America. “The longer industry has to spend the millions they’re clearly willing to spend to kill or delay this rule, the less likely it is retirement savers will get the protection they will deserve.”

The Obama administration has had a long, tumultuous history in trying to establish a fiduciary duty for advisers. The Labor Department scrapped a previously proposed rule after members of both parties criticized it, and the effort only got back on track after Obama publicly supported the initiative earlier in the year.

But there is still some bipartisan concern. Some Democrats say they would favor another delay, and a quartet of House lawmakers — two Republicans and two Democrats — say they are close to unveiling legislation that would address the Labor Department’s regulatory efforts.

“The growing bipartisan interest we have seen demonstrates the continued concerns many have with the department’s approach and the need for Congress to offer a responsible solution,” said Rep. Peter Roskam (R-Ill.). “While we still have a few details to finalize, we are optimistic we will introduce a bill before Congress breaks for the holidays.”

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