Obama Vows to Veto DOL Rule Disapproval Bill
The White House has promised to veto a so-called Congressional "disapproval bill" which is attempting to throw out the Department of Labor’s fiduciary rule, the Hill reports. The House of Representatives is expected to vote on its version of the disapproval motion tomorrow, according to the political news publication.
“If the President were presented with [the House disapproval measure], he would veto the bill,” the White House’s Office of Management and Budget said in a statement.
President Barack Obama’s administration has long stood behind the DOL rule, which forces retirement brokers to put clients’ interest first. But GOP lawmakers in both chambers last week introduced similar bills to stop the rule, as reported previously. Despite substantial changes to the rule following criticism that it would price out lower-income savers out of financial advice, many Republicans and some Democrats are still expected to support the disapproval motion introduced by Rep. Phil Roe, R-Tenn., in the House and Sen. Johnny Isakson, R-Ga., in the Senate, as reported previously.
Following the April 8 finalization of the DOL rule, Congress entered a 60-day period during which it can override the bill under the Congressional Review Act, the Hill writes. The disapproval measures only require a simple majority to pass, but congressional critics likely don’t have enough support to override a veto, according to the Beltway publication.
Many in the industry welcomed the changes to the final rule, as reported previously. But on Wednesday lawmakers received a letter that supports killing the rule.
The letter was from eight trade groups, including long-time critic Sifma, along with Financial Services Roundtable, and Independent Insurance Agents and Brokers of America, the Wall Street Journal writes.
The Investment Company Institute also sent a letter to House Speaker Paul Ryan, R-Wis., and Minority Leader Nancy Pelosi, D-Calif., supporting the disapproval measure, according to Law360.com. And the U.S. Chamber of Commerce, as well as the group representing the three largest sellers of indexed annuities — a sector which received harsher treatment following the changes — are also weighing a legal action to stop the rule, according to the Journal.
Meanwhile, some groups generally supportive of the rule were also unhappy with some the DOL's final changes, saying the government made too many concessions to the industry, the publication writes.
Advisors and brokerages are adapting to the rule, however, according to the Journal.
Final changes appear to have convinced many advisors that the rule is workable, if flawed: 51% think the rule will help their business, compared to just 27% who did in 2015, according to a webinar poll of 861 advisors conducted by Pioneer Investments following the rule’s release.
On the other hand, 47% of advisors in this year’s survey thought it would hurt investors by raising costs and limiting access to advice for lower-income savers, compared to the 42% who thought so in 2015, according to the poll.