[Congressional Record Volume 162, Number 66 (Thursday, April 28, 2016)]
[House]
[Pages H2081-H2092]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
DISAPPROVING DEPARTMENT OF LABOR RULE RELATED TO DEFINITION OF THE TERM
``FIDUCIARY''
Mr. ROE of Tennessee. Mr. Speaker, pursuant to House Resolution 706,
I call up the joint resolution (H.J. Res. 88) disapproving the rule
submitted by the Department of Labor relating to the definition of the
term ``Fiduciary'', and ask for its immediate consideration in the
House.
The Clerk read the title of the joint resolution.
[[Page H2082]]
The SPEAKER pro tempore. Pursuant to House Resolution 706, the joint
resolution is considered read.
The text of the joint resolution is as follows:
H.J. Res. 88
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, ThatCongress
disapproves the rule submitted by the Department of Labor
relating to ``Definition of the Term `Fiduciary'; Conflict of
Interest Rule--Retirement Investment Advice'' (published at
81 Fed. Reg. 20946 (April 8, 2016)), and such rule shall have
no force or effect.
The SPEAKER pro tempore. The joint resolution shall be debatable for
1 hour, equally divided and controlled by the chair and ranking
minority member of the Committee on Education and the Workforce.
The gentleman from Tennessee (Mr. Roe) and the gentleman from
Virginia (Mr. Scott) each will control 30 minutes.
The Chair recognizes the gentleman from Tennessee.
General Leave
Mr. ROE of Tennessee. Mr. Speaker, I ask unanimous consent that all
Members may have 5 legislative days in which to revise and extend their
remarks and include extraneous material on H.J. Res. 88.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Tennessee?
There was no objection.
Mr. ROE of Tennessee. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise today in strong support of H.J. Res. 88. I was
proud to introduce this resolution, along with Representatives Boustany
and Wagner, to ensure that all Americans have access to affordable
retirement advice.
Today, there are far too many men and women in this country who don't
have the retirement security that they need and deserve.
In 2015, the GAO found that 29 percent of Americans 55 years and
older have no retirement savings and no traditional pension. In fact,
today, nearly 40 million working families haven't saved a dime for
retirement.
This is a serious problem, and we need to make it easier for
families, particularly low-income and middle-income families, to save
for their retirement years. That means making sure that every American,
regardless of income, is able to access the tools they need to plan for
the future. It also means ensuring financial advisers act in their
clients' best interests.
Let me say that again. It also means ensuring financial advisers act
in their clients' best interests, a priority we all share.
Since the Department began its efforts more than 5 years ago, we made
it clear that we believe retirement savers need greater protections.
That is why we held numerous hearings, sent letters, and engaged in
other oversight activities to advance a responsible solution to help
those saving for retirement; and it is why our committee put forward a
legislative alternative requiring high standards for retirement advice,
while also ensuring access and affordability.
Rather than engaging with Members advancing a thoughtful alternative,
however, the Department opposed our bipartisan proposal outright.
Instead, the Department of Labor rushed a finalized, misguided rule
that will hurt the very people they intended to help.
Does anyone think that a 1,000-page rule that I hold in my hand here
will make it more likely for Americans to save for retirement?
In my left hand here, I hold a Webster's dictionary, which defines
every word in the English language, and it only has a few more pages
than this 1,000-page rule that defines one word, Mr. Speaker,
``fiduciary.'' The last thing Washington should be doing is making it
harder for working families to save and invest, but because they took
their my-way-or-the-highway approach, we now have a rule that will do
exactly that.
The fiduciary rule will make it harder for working families to save
for retirement. It will restrict access to some of the most basic
financial advice, and it will create new hurdles for small businesses
who want to offer their employees retirement options.
These are consequences many Americans cannot afford, and they are
consequences we will not accept. That is why this resolution is so
important: to put a stop to this fundamentally flawed rule and protect
the men and women working to retire with the financial security and
peace of mind they deserve.
Mr. Speaker, I urge my colleagues to vote ``yes'' on H.J. Res. 88.
I reserve the balance of my time.
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in opposition to H.J. Res. 88. This Congressional
Review Act resolution of disapproval would undo the Department of
Labor's final rule that simply ensures financial advisers act in the
best interests of their clients with retirement funds.
Now, this is a Department of Labor rule that only applies to workers'
retirement funds. In times past, people would retire and receive a
defined benefit. They would just retire and get their promised income.
But now, we have what are called defined contribution plans, where the
money is invested and, over the years, if someone, even a modest-income
person, invests over his 40-year career, he could easily amass a fund
of hundreds of thousands of dollars, even $1 million if they start
early and invest consistently.
So we are talking about people who may not have bought a single share
of stock or a bond or mutual fund in their life, who walks into an
investment adviser's office with all of the savings that could amount
to as much as $1 million.
{time} 1345
For far too long, certain financial advisers have been able to
exploit loopholes in the decades-old regulation that governs investment
advice for retirement savers. Right now, financial advisers can easily
steer retirement clients towards financial products that may yield the
adviser a big commission but may not be in their clients' best
interest. Of course, not every financial adviser does this, but some
do.
This unscrupulous practice of providing what is called conflicted
advice insidiously erodes workers' retirement nest eggs. According to
the White House Council of Economic Advisers, retirement savers lose
$17 billion a year as a result of receiving conflicted advice about
their retirement savings.
The Department of Labor recognizes the magnitude of this problem, and
the department took action to protect workers' retirement savings. All
told, they have been working on this issue for nearly 6 years. Over the
past year alone, they conducted hundreds of meetings and provided the
American public and industry representatives with nearly 6 months to
weigh in on their proposal to fix the problem.
Secretary Perez and his colleagues listened to and repeatedly assured
industry officials, Members of Congress, and other stakeholders that
the final proposal would reflect the input that the department received
and that the department would get the rule right. I believe the
department did just that. The final rule addresses the legitimate
concerns raised by Members of Congress, industry, and other
stakeholders without compromising the main goal: ensuring that
retirement clients receive investment advice that is in their best
interest.
I am not alone in believing this. The broad and diverse coalition of
stakeholders, including AARP, AFL-CIO, NAACP, National Council of La
Raza, and many others have registered strong support for the rule.
But let's be clear: support for the final rule is not limited to
those who represent and advocate for consumers and workers. Initial
reactions to the final rule from Merrill Lynch Wealth Management, TIAA,
Morgan Stanley, and others in the financial services sector have been
positive and encouraging. Other companies appear to be reserving
judgment on the rule until they better understand its full
implications, and that is understandable.
But House Republicans have not reserved judgment. They have rushed to
judgment in their opposition to the final rule. That is unfortunate
because the final rule is a responsible solution to a real problem. The
rule will help workers enjoy a dignified retirement, and this
resolution would reject the rule.
Mr. Speaker, this resolution should be rejected for what it is: an
effort to perpetuate an unacceptable status quo that allows some
advisers to operate under a business model that puts their
[[Page H2083]]
interests and their financial interests ahead of their clients'
interests. We should protect workers' hard-earned retirement funds and
reject this resolution.
Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 2 minutes to the
distinguished gentleman from Louisiana, Dr. Charles Boustany, a member
of the Committee on Ways and Means.
Mr. BOUSTANY. Mr. Speaker, planning for retirement can be a difficult
and often bewildering task. Consumers have to choose from a complex web
of plans, including traditional IRAs, Roth IRAs, SIMPLE IRAs, Qualified
Plans, 403(b) accounts, or 529 plans.
Let's face it, the average American oftentimes has a difficult time
understanding what these types of plans do, which is why it is
necessary to have licensed, professional retirement advisers and
financial advisers to help navigate the system.
Today, baby boomers are retiring at a rate of 10,000 a day. In 2014,
an estimated $325 billion was withdrawn from 401(k) plans in the United
States for retirement purposes. This is a big deal. But the Obama
administration is now proposing new rules that will make it so costly
to use a retirement adviser, most low- and medium-income families will
be locked out. This is just not right.
The heavy burdens imposed by the administration's fiduciary rule
could result in fewer Americans saving for retirement using private-
sector vehicles such as 401(k)s or IRAs. Don't take it just from me.
Take it from a licensed financial adviser from my hometown of
Lafayette, Louisiana, who said the following in comments to the
Department of Labor: ``This proposed regulation could force some
investors into a fee-based account arrangement which could actually be
to their detriment. Just as in most things in life, a one-size-fits-all
solution would most certainly not be best for all.''
Ultimately, this will stifle individual choice and empower government
bureaucrats to make decisions on behalf of those saving for retirement
instead of professional retirement advisers with the knowledge and
qualifications to provide advice for their clients.
I ask this question: How can a regulation that could disqualify up to
7 million IRA holders from investment advice and potentially reduce the
number of IRAs opened annually between 300,000 and 400,000 be a good
idea?
That just defies common sense. I believe policymakers should do
everything they can to help Americans prepare for retirement and not
create red tape that makes saving for retirement more difficult. That
is why I urge passage of this bill.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentlewoman from California (Ms. Maxine Waters), the ranking member of
the Committee on Financial Services.
Ms. MAXINE WATERS of California. Mr. Speaker, I rise today in strong
opposition to H.J. Res. 88, which would invalidate the Department of
Labor's recently finalized fiduciary duty rule and threaten our
seniors' retirement savings to the tune of $17 billion per year.
The rule closes loopholes and gaps in our laws so that all financial
advisers act in their clients' best interest when providing advice on
retirement investments. This is an essential reform that will protect
our seniors and ensure our retirees are financially secure.
Not only is this rule a commonsense update, but the Department of
Labor worked diligently to address all legitimate stockholder concerns.
Secretary Perez should be commended for his exemplary leadership on
this issue.
The Department of Labor spent countless hours reviewing comments,
meeting with industry and other interested stakeholders, and responding
to lawmakers' concerns. That effort has resulted in a strong, workable
rule that takes into account different business models across the
industry.
For example, the final rule specifically allows firms to recommend
proprietary products as long as they make certain disclosures and act
in the clients' best interest. It streamlines those required
disclosures to make it easier for firms to comply. It provides
flexibility in the timing of a contract between a client and an
adviser, and it establishes clear distinctions between what is
considered education and advice.
Overall, the final rule is carefully crafted to protect investors
while creating a workable process for financial advisers. What is more,
the rule is supported by hundreds of stakeholders who represent the
financial services industry, the public interest, civil rights,
consumers, labor unions, and many investment advisers who are already
providing advice to savers under a fiduciary standard, yet my
colleagues on the other side of the aisle are so intent on dismantling
this crucial rule.
This resolution is not their first attempt. H.R. 1090, which went
through my committee and passed the House largely along party lines,
would have imposed unacceptable delays on the Department of Labor's
rulemaking effort. Different measures were considered in other
committees that would have replaced the rule with a harmful
alternative, and riders were attempted on appropriations bills to
prevent the department from working on this rule altogether.
Now, Republicans may have the votes to pass the disapproval
resolution on a simple majority, but the President will veto this bill,
and Democrats will stand strong to ensure that they cannot override
that veto. We will ensure that the laws protecting our seniors' savings
are as robust as possible in a fair market. We will ensure that
hardworking Americans can trust their financial advisers and make sound
investments, and we will ensure that everyone has a right to retire
with dignity and security.
Mr. ROE of Tennessee. Mr. Speaker, I want to put one thing to rest
now. This $17 billion you are going to hear over and over again, what
they simply did with this formula was take the amount of money in
retirement savings and assume that if you used any other adviser other
than a fiduciary through the life of the investment, you would get 1
percent less earnings. That is how you get to $17 billion. It has been
refuted by numerous people.
Mr. Speaker, I yield 3 minutes to the distinguished gentlewoman from
Missouri (Mrs. Wagner), who serves on the Committee on Financial
Services.
Mrs. WAGNER. I thank the chairman for his leadership and for yielding
me the time.
Mr. Speaker, I rise today in support of a resolution to stop the
Department of Labor from attacking Americans' savings.
Mr. Speaker, investing in the future and saving for retirement can be
some of the most personal and consequential decisions that families
make. With three children to raise, my husband and I worked tirelessly
to put food on the table each day while squeezing what we could into a
retirement account.
For those families today living paycheck to paycheck, we must provide
more opportunities to save for the future, not limit them. Mr. Speaker,
this is about Main Street, not Wall Street.
The DOL's fiduciary rule is simply ObamaCare for retirement savings.
It is clear that this top-down, Washington-knows-best power grab will
only hurt those it claims it will protect: low- and middle-income
families that are looking for sound investment advice in the midst of a
savings crisis.
Today, sadly, 45 percent of working-age families do not have any
retirement savings. Nearly half of our workforce is not saving for
retirement. For those who are saving, the average retirement balance is
only $3,000 for working-age families and $12,000 for families nearing
retirement.
Every American should have access to sound investment advice, but the
Department of Labor is going too far, increasing costs for advice and
ultimately putting low- and middle-income, hardworking families at a
severe disadvantage. Congress must act to stop this intrusion on
Americans seeking to do the right thing regarding their savings
responsibility.
Rarely in Washington do Democrats and Republicans find common ground
on issues, but with the Department of Labor forcing more than 1,000
pages of investment regulations on American families, we have joined
together with bipartisan concern.
Mr. Speaker, the choice is simple: either you stand with low- and
middle-income families saving for the future or you stand with yet
another Big Government takeover by this administration.
[[Page H2084]]
Mr. Speaker, the resolution that we will vote on today will stop this
rule and give Americans the freedom--the freedom--to choose how they
plan for and invest in their future.
Mr. Speaker, I strongly encourage my colleagues to pass this
resolution.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 4 minutes to the
gentleman from Michigan (Mr. Levin), the ranking member of the
Committee on Ways and Means.
(Mr. LEVIN asked and was given permission to revise and extend his
remarks.)
Mr. LEVIN. Mr. Speaker, I thank the distinguished ranking member for
yielding. The gentleman has worked so hard on this with so many others.
Mr. Speaker, this fiduciary rule has had a long, dedicated and
deliberative journey. The administration first issued proposed
regulations on this issue in 2010. They received many comments from
consumer and industry groups, and they decided to redraft the proposal.
That new proposal, issued last year, prompted more than 3,000 comment
letters. The administration and the Department of Labor actively took
these comments and the numerous consultations on all sides of this
issue into account when they prepared the final draft of the rule. It
is the way government should act.
What the Department of Labor rule does is strengthen the trust
between a financial adviser and their client. It says that a fiduciary
or financial adviser must act in their clients' best interest. The
Republicans oppose this rule guided by their ideological blinders.
{time} 1400
This rule is important because when the Employee Retirement Income
Security Act, ERISA, was first passed in 1974, 401(k) plans did not yet
exist and IRAs had just been created. Today, more Americans have 401(k)
plans than pension plans and must manage their own investments.
Republicans today continue their claim that this rule will make it
more difficult for small businesses and low- and middle-income
Americans to get financial advice because it will cost them more. The
fact is that conflicted investment advice costs American families
billions of dollars every year.
As the White House said: ``some firms have incentivized advisers to
steer clients into products that have higher fees and lower returns--
costing American families an estimated $17 billion a year.'' It
continues: ``If the President were presented with H.J. Res. 88, he
would veto the bill.''
This rule-making process isn't top down; this is from the bottom up.
Listening to people, listening to everybody--to everybody--and coming
out with a rule that is responsive to the needs of the American people,
that is really what this is about. Instead, we have Republicans coming
forth again, essentially, as I said, with their blinders on, opposing
this rule, when they know that if it ever passed the Senate--and I
don't think it will--it would be vetoed by the President.
I strongly urge that my colleagues vote against this resolution.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the gentleman
from California (Mr. Royce), the chairman of the Foreign Affairs
Committee.
Mr. ROYCE. Mr. Speaker, here is what we do know. We do know that the
negative impact of this rule on consumers is not hypothetical. The
reason we know it is because the United Kingdom has already lived
through an effectually identical rule. The result in the UK was an
advice gap that locked out nearly half a million middle-and low-income
savers.
Just last week, the head of the SEC's Division of Economic and Risk
Analysis admitted that the Labor Department knew of the disastrous
impact of what he termed the experiment in the UK that locked out these
middle-income and low-income savers from advice, yet it moved forward
to put us on that same path.
Mr. Speaker, we live in a country that ranks 19th in the world for
retirement security. Half of Americans cannot find $400 in savings if
hit with an emergency. We should be doing more to encourage Americans
to save. This rule, obviously, does exactly the opposite.
I urge my colleagues to support this resolution.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 3 minutes to the
gentlewoman from Oregon (Ms. Bonamici), a leader on the House Education
and the Workforce Committee.
Ms. BONAMICI. Mr. Speaker, too many families and individuals across
Oregon and across our country are struggling to get ahead. I know the
sacrifice that is involved in each and every dollar they set aside to
contribute to their retirement. Building a stable base for retirement
security should be within reach for everyone. That is why I will vote
``no'' on H.J. Res. 88.
Consumer protection is one of the reasons I am standing on the House
floor today. Throughout my career, I have advocated for families who,
despite their best efforts, have found their financial and retirement
security at risk. At Legal Aid, I helped families who were on the brink
of losing everything; as a consumer protection attorney at the Federal
Trade Commission, I took on mortgage brokers who had defrauded people
out of their homes; and in private practice, I represented people who
lost their life savings when they relied on misrepresentations by
people selling securities and franchises.
I pay close attention to the fiduciary rule because I know that
consumer protection laws can keep Americans financially secure and
level the playing field. A thriving marketplace without deceptive
practices can restore consumer confidence and grow the economy.
For too long, people saving for retirement have had few tools to know
if their financial adviser was directing them to a product that was in
their best interest and most appropriate for their specific needs and
goals. Seeking to fix this uncertainty and put the interest of future
retirees first, the Department of Labor took great care when crafting a
final rule to remove conflicts of interest and restore confidence to
savers. They heard from people around the country, including consumer
protection groups and leaders in the investment industry. They heard
from people who had lost their life savings because of financial advice
that was not in their best interest.
Saving for retirement is crucial for our country's economic security,
but too many Americans are uncertain about how they can stretch their
hard-earned dollars to provide for themselves and their families.
Products and choices are complex. The Department of Labor sought to
protect these Americans from conflicted advice so they can be prepared
for retirement while allowing financial advisers to continue to play an
important role in this process. Stakeholders from all sides of the
issue were involved in the rulemaking. The Department took time,
listened to them, and made multiple changes to make sure this rule is
workable.
I applaud the Department of Labor for their thoughtful and thorough
rulemaking process. I urge my colleagues to oppose this misguided
legislation that seeks to block this important fiduciary rule.
I thank Ranking Member Scott for his leadership on this issue.
Mr. ROE of Tennessee. Mr. Speaker, a title does not make you honest.
Bernie Madoff was a fiduciary, I might add.
Mr. Speaker, I yield 1 minute to the gentleman from Minnesota (Mr.
Kline), the distinguished chairman of the Education and the Workforce
Committee.
Mr. KLINE. Mr. Speaker, I thank the gentleman for yielding.
For several years now--about 7--we have heard from Americans, we have
heard from employers, and we have heard from families that the American
economy, the American people, and employers are under an assault from a
blizzard of regulations. In the last year, as we near the closing
months of this administration, the blizzard is almost a whiteout. You
can hardly see, they are coming so fast.
This is one such regulation, and it is everywhere in industries
across America. It is choking us. We have got to stop it. Please,
please, let's start here today and support this bill.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentleman from Maryland (Mr. Delaney), a Member who, before coming to
Congress, had a long career in the financial services industry.
Mr. DELANEY. I thank the gentleman for yielding.
[[Page H2085]]
Mr. Speaker, we have a looming retirement crisis in this country.
People are living longer, the cost of retirement is greater than it has
ever been, Americans haven't been able to save for retirement because
wages have not gone up, and across the last several decades we have
shifted the risk of retirement from institutions to individuals.
In that context, the notion that we would allow, perhaps, upwards of
20 percent of hardworking Americans' savings to be eroded because of
conflicted investment advice is preposterous. It is for that reason I
am a strong supporter of the Department of Labor's fiduciary rule and
stand here in opposition, against any efforts to undermine it.
The notion that average Americans, low-income Americans, and middle
class Americans won't receive service in the context of this new rule
is also invalid. One of the greatest expenses financial institutions
have is customer acquisition, in other words, the amount of money they
invest to acquire customers. The idea that they would somehow get rid
of millions and millions of customers that they have already invested
huge amounts of money in acquiring I find to be not only a bad business
decision, but not logical in the context of the private market, the way
we understand it.
Also, to the extent that they would do that, I believe right now, as
we speak, there are entrepreneurs and investors sitting in conference
rooms all over this country with whiteboards figuring out new business
models that will deliver high-quality, fiduciary-level, nonconflicted
financial advice to average Americans in an efficient manner that meet
the standards of this fiduciary rule.
For all these reasons, I support the rule. I stand in opposition
against any efforts to undermine it. This is an important step in
dealing with our looming retirement crisis, and it is the proper role
of government to level the playing field and then to allow the private
market to solve the problem.
Mr. ROE of Tennessee. Mr. Speaker, I will point out what has happened
in England. We have a playbook by which to look at, where a very
similar rule was implemented in England, about how many investors lost
advice.
Mr. Speaker, I yield 2 minutes to the gentleman from Louisiana (Mr.
Scalise), the distinguished whip.
Mr. SCALISE. I thank my friend from Tennessee for bringing this
legislation forward.
Mr. Speaker, what we are trying to do here is help people and
encourage more savings. 401(k) plans were so good at making it easy for
people to save money for their retirement. Frankly, we should be doing
as much as we can here in Washington to make it even easier to
encourage more people to save for their retirement.
But here comes the Department of Labor and, literally, with this
massive document to define one word--what the term ``fiduciary''
means--is going to make it dramatically harder for Americans to save
money for their retirement. Anybody who thinks that this massive
document, defining the ability for people to save money, is going to
make it easier or make it less costly to save money doesn't understand
just how many teams of lawyers will be employed to go and try to figure
out what this means.
What it will mean, Mr. Speaker, is that the cost for hardworking
taxpayers to go and put more money in their retirement is going to go
up dramatically. It also means--and you want to talk about a perverse
incentive--the rule, this massive rule, actually imposes even more
burdens on small businesses than it does on large businesses. So the
very engine of our economy--small businesses--will literally have to
face the question of whether or not they can even afford to provide
401(k) services to their employees. Employees love the ability to have
a 401(k).
Employees also move around a lot from job to job and enjoy the
ability to roll over their 401(k), and this massive rule actually makes
it nearly impossible for people to roll over their 401(k), dramatically
increasing the cost. Why would you want to do that?
What we are trying to do here is say: Go back to the drawing board.
This rule makes no sense. This rule actually hurts the ability for
hardworking taxpayers to save money for their retirement, the exact
opposite thing the Federal Government should be doing.
I applaud my friend from Tennessee for bringing this forward, and I
urge adoption.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentlewoman from Connecticut (Ms. DeLauro), the ranking member of the
Appropriations subcommittee with jurisdiction over the Department of
Labor.
Ms. DeLAURO. Mr. Speaker, I rise in opposition to this resolution,
which would block the implementation of the Department of Labor's
conflict of interest rule.
I strongly support what the Department of Labor is trying to do with
this rule: simply to ensure that financial advisers act in the best
interest of the consumer.
Unfortunately, the rule is necessary because some financial advisers
are recommending financial instruments that offer rewards or
commissions to the adviser for steering the client to those particular
instruments instead of recommending retirement options that are in the
best interest of the customer. This is about safeguarding worker
retirement savings.
The White House Council of Economic Advisers estimates that conflicts
of interest cost about $17 billion per year in lost savings for
Americans who are trying to save for retirement. This is unacceptable.
When hardworking Americans seek advice on how to invest for
retirement, they should not have to worry about being led to make
decisions that are not in their best interest. By establishing this
fiduciary duty that would require advisers to act in the interest of
the customer, we could end this predatory practice.
The rule requires brokers to disclose their fees and financial
incentives when offering a financial product, introducing much-needed
transparency to the process. Right now, advisers are under no
obligation to disclose this information.
When it comes to retirement, every penny counts. It is unconscionable
that we would allow self-interested advisers to rob hardworking
American families of their hard-earned retirement savings.
The bottom line is that we must pursue policy solutions that benefit
working families and that help them to adequately prepare for
retirement. Please oppose the resolution.
{time} 1415
Mr. ROE of Tennessee. Mr. Speaker, there we go again. No matter how
many times you say ``$17 billion,'' it doesn't mean it is a fact.
I yield 2 minutes to the gentleman from Indiana (Mr. Messer), my good
friend. He has two very special guests today, his children, who are on
the House floor with him.
Mr. MESSER. Mr. Speaker, I have Hudson and Ava with me. That is
right. I thank the chairman.
Mr. Speaker, I rise in support of H.J. Res. 88, and I commend my
colleague from Tennessee for bringing this important measure forward.
In life and in public service, we are not just responsible for our
intentions, we are responsible for the results, the true consequences
of our actions. Unfortunately, the Obama administration often seems to
ignore this simple life wisdom.
My colleagues across the aisle have spent a lot of time today talking
about their good intentions with this 1,000-page rule.
Do you know what?
It may be true that the Department of Labor's fiduciary rule was
intended to protect consumers. The problem is the rule will, in fact,
have the opposite result.
We need more families saving for retirement, and those families need
sound financial advice. Instead of increasing access to financial
advice for those who need it the most, this rule will cut off access to
affordable retirement counsel for many lower- and middle-income
Americans. That is the true result of the so-called fiduciary rule.
Dr. Roe's legislation, H.J. Res. 88, would stop this rule from taking
effect, stand up to the Federal bureaucrats, and protect American
families who are struggling to save for their futures.
I urge my colleagues to support this commonsense bill.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentleman
[[Page H2086]]
from California (Mr. Becerra), the chair of the Democratic Caucus.
Mr. BECERRA. I thank the gentleman for yielding.
Mr. Speaker, just as we expect our doctors to act in our best
interests, so should the financial advisers, whom we pay to help us
make those very important investment decisions for retirement. There is
nothing strange about this rule. It is just trying to bring us up to
speed with the times. This rule says that the saver's best interest
comes first before the financial adviser's commission can be taken into
consideration or before that financial adviser can make decisions based
on his or her association to a particular type of investment.
Thirty years ago maybe this was not such a big issue because, 30
years ago, folks, like my parents, used to get their retirement savings
through their pensions. You paid into it through your work, and you
knew how much you would get out. It was fixed. It is what we called
defined benefit plans. Your benefit was defined because you kept
contributing while you worked. Those are pretty much gone.
Today it is all about 401(k)s and IRAs, and all of a sudden, you, the
worker, have to make decisions on your investment because you do not
know how much it will return once you retire. It is all based on what
the market does; so now you have to make sure that your money that is
in this 401(k) goes to the right investment vehicles.
The best thing to do is to go to someone who can give you advice. Too
often, some of these advisers are advising you not based on what is in
your best interest, but on where they can get extra commissions or if
they have associations with particular investments.
This rule simply says to make your decision in the best interest of
the saver, not in your best interest as the financial adviser. That is
all it says. It is a big rule.
Why?
Because the financial services industry said: Wait a minute. You just
can't say that. You have to say it in ways that don't affect the way we
have a relationship with that saver.
So all of those accommodations were made to try to deal with it so we
would always have investment advisers who would want to deal with
American savers.
Remember, the problem here is that a lot of Americans don't have a
lot to save, and a lot of investment advisers say: You are not worth my
time.
What we don't want to do is restrict those investment advisers from
talking to the average American who doesn't have all that much to save
for retirement; but, by God, we don't want to say to that investment
adviser to go ahead and take advantage of that saver.
This is a best interest rule for the saver. We should vote against
this rule which rejects the Department of Labor's rule.
Mr. ROE of Tennessee. Mr. Speaker, I inquire as to the time
remaining.
The SPEAKER pro tempore. The gentleman from Tennessee has 15\1/2\
minutes remaining. The gentleman from Virginia has 10 minutes
remaining.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the gentleman
from South Carolina (Mr. Wilson), a member of the Committee on
Education and the Workforce.
Mr. WILSON of South Carolina. I thank Chairman Phil Roe for yielding,
and I appreciate his leadership on this issue for American families.
Mr. Speaker, I am in strong support of the resolution to disapprove
of the Department of Labor's fiduciary rule. This 1,000-page rule is
yet another one of the President's burdensome, expensive regulations.
Instead of helping American families by expanding access to financial
advice, the Department of Labor has overly restricted the definition of
a fiduciary and has created new obstacles for small business owners.
In just reading the rule of 1,000 pages, much less picking it up, it
is going to cost consumers. This administration's misguided fiduciary
rule will make it harder for small businesses to assist their employees
in preparing for retirement; it will increase costs; and it will limit
choices for those who need the advice most: American families.
In the past months, I have met with business leaders and financial
advisers of the highest integrity across the Second Congressional
District who share my concerns about the negative impacts of this
unworkable regulation, which limits freedom.
Again, I appreciate Chairman Phil Roe's leadership in sponsoring the
resolution, and I urge my colleagues to vote in support.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentlewoman from New York (Mrs. Carolyn B. Maloney), who has worked
hard on this issue.
Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I strongly oppose
this resolution.
The Department of Labor's fiduciary rule is President Obama's top
remaining domestic priority, and I think we owe the American consumer,
the American people, and our seniors our support.
This rule advances a very simple principle: if you are giving
investment advice to someone and if you are being paid for this advice,
then you must put the interest of the consumer first. You must think
about the consumer before you think about yourself or about making a
fee or making your firm a fee or about helping someone else besides the
consumer.
It merely says to think about the consumer and protect his interests.
This is not just common sense--it is the fair, honest thing. We
shouldn't have to legislate this. We are legislating this because there
are abuses in this area. We are trying to stop these abuses and give
good investment advice to good American citizens.
Let's not forget that most investors think it is already the law.
They think that their advisers are giving them their best advice. This
merely says that you have to think about the seniors and the American
people. This should be like having a glass of water.
On this, there should not be a vote. The fact that we are coming to
the floor to try to roll back a rule that helps Americans have fair and
just savings is absolutely outrageous. If you have a problem, go to the
Department of Labor. I have been there six times and I have raised
concerns. They have incorporated every single change in the rule. They
have given advanced time. They have bent over backwards to everyone who
has raised an issue in this Congress and to every member of industry.
That is why it is so long.
This protects the interests, the finances, of the American people. It
puts money--saves money--in their pockets instead of forcing them to
spend it on fees that are unnecessary and on products they don't need.
A vote for this is a vote against the American family. Please vote
against it. I believe that anyone who votes against this does not have
the interests of America in his heart.
Mr. ROE of Tennessee. Mr. Speaker, I yield myself such time as I may
consume.
Just to clear this up a little bit--and we all agree, everybody on
both sides of the aisle, and Mr. Scott and I have agreed on this
repetitively--if only best interests were the case, why isn't it just
one sentence on one page and not 1,000 pages?
Number two, this is about small investors.
Mr. Speaker, a higher-income investor, like myself, this bill doesn't
affect one bit--it will not affect me at all, and it affects nobody on
Wall Street because most of us pay a percent of our assets in a fee.
That is what we do and that is exactly what this joint resolution is
doing. We are worried about small- and low-income investors. We have
seen exactly this in England, and it is going to be repeated here once
again.
Mr. Speaker, I yield 1 minute to the gentleman from Georgia (Mr.
Carter), my good friend and fellow member of the Committee on Education
and the Workforce.
Mr. CARTER of Georgia. I thank the gentleman for yielding.
Mr. Speaker, I rise to express my support for H.J. Res. 88, a
resolution disapproving of the Department of Labor's final rule that
changes the definition of fiduciary.
This new definition hits low- and middle-income savers the hardest
and would leave many unable to save for retirement at all.
Additionally, it would make it significantly more difficult for small
businesses to seek the investment advice they need to provide for their
employees in order for them to plan and save for retirement.
In having owned and operated community pharmacies for nearly 30
years,
[[Page H2087]]
I take pride in having provided my employees with the tools they have
needed to achieve financial independence, and retirement investment
plans are one of the most important tools in this effort. Like many
small business owners, I consider my employees to be part of my family.
That is why H.J. Res. 88 is so important.
The new rule is a classic case of the Federal Government's stepping
in the way of the Main Street success story with a ``Washington
bureaucrats know best'' mentality, and it must be stopped. Americans
have the right to choose how they save and what to save for, and this
final rule from the DOL will only increase burdens on Americans and
small businesses, limit opportunities, and ultimately hurt their
chances to plan for their futures.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 2 minutes to the
gentlewoman from Illinois (Ms. Schakowsky), a strong consumer advocate.
Ms. SCHAKOWSKY. I thank the gentleman from Virginia for yielding to
me and for his commitment to improving the lives of working Americans
and retirees.
Mr. Speaker, this is a very dangerous bill as 86 percent of Americans
believe that we are facing a retirement crisis in this country and as
75 percent are concerned about their own abilities to have secure
retirements. More Americans fear outliving their money more than they
fear death, and 8 in 10 want us to help them have guaranteed streams of
income in retirement.
That is why I am just amazed that my Republican colleagues are
pushing this resolution of disapproval on a carefully crafted,
thoughtfully designed rule to improve retirement security, especially
for people who need the help.
We have moved to an era when most workers, if they are offered any
pensions at all, are given defined contribution options, like self-
directed IRAs and 401(k)s. This means that their retirement security
relies on the individual decisions they make, and many turn to
financial advisers for guidance. They believe that when they pay for
advice, that the advice that will be given will be in their best
interests.
Why shouldn't they believe that?
The rule that my Republican colleagues want to overturn would ensure
their best interests.
What happens when retirement investment advice isn't in the client's
best interest?
Hard-earned retirement dollars are lost. It is estimated that
Americans lose $17 billion a year because of conflicted advice, and
individuals could lose nearly 25 percent of their assets over a 35-year
period. Working women and men in this country and retirees are
struggling, and the ``best interest'' standard is one step to help
them.
I urge all of my colleagues to stand up for retirement security and
reject this dangerous resolution. The ``best interest'' standard
shouldn't just apply to financial advisers, it should apply to us here
in Congress. Let's vote to protect the best interests of our
constituents.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the gentleman
from Georgia (Mr. Allen), my good friend and fellow member of the
Committee on Education and the Workforce.
Mr. ALLEN. I thank the gentleman for yielding.
Mr. Speaker, I rise in support of H.J. Res. 88, legislation that
would disapprove of the Department of Labor's fiduciary rule.
This new DOL fiduciary rule definition will impose costly new
mandates and burdensome regulations on retirement advisers. This will
negatively affect and disproportionately hurt low- and middle-income
families who seek retirement advice but who do not have enough in
savings to afford an ongoing fee-for-service approach.
{time} 1430
In other words, it is just another Washington one-size-fits-all
solution that hurts those who may need financial advice the most.
Five years ago the Obama administration introduced a similar rule
that was met with much opposition. Well, not much has changed in those
5 years. This rule will do more harm than good to the very people it is
claiming to protect.
The majority of my time in Washington is spent fighting executive and
agency overreach, and this rule is just another example of the failed
Obama administration's attempt at Federal Government monopolization of
retirement advice.
Everyone deserves accessible advice when planning and saving for
retirement. The people in my district are sick and tired of these
unelected bureaucrats in these departments and agencies imposing these
rules.
I am proud to cosponsor H.J. Res. 88, and I urge my colleagues to
join me in support.
Mr. SCOTT of Virginia. Mr. Speaker, I yield 1 minute to the gentleman
from Minnesota (Mr. Ellison), a hardworking advocate for workers.
Mr. ELLISON. Mr. Speaker, I thank the gentleman from Virginia for his
hard work.
We know that, when people leave their jobs, they may get a call from
an adviser offering to help the worker roll over their 401(k) or 403(b)
into an IRA.
What the worker does not know is that the adviser oftentimes is
really a salesperson. That salesperson has no responsibility to put the
worker's best interest first. The law did not require a best-interest
standard.
So some advisers steer people to high-cost products with hidden fees
and hidden commissions. This practice by some, but not all, financial
advisers strips wealth from families trying to save for retirement.
For 15 years consumer and investor advocates have fought to protect
savers from these conflicts of interest. Finally, the Obama
administration and Democrats worked with industry for a workable, best-
interest standard.
Today's vote is clear: Do you support rules that protect savers'
ability to build wealth? Do you want to protect investors from
conflicts of interest?
I do. That is why I oppose today's effort by Republicans to put the
profits of the financial advisers ahead of future retirees. Best
interest of the saver and the worker, not the best interest of the
industry, is how you should vote today. Vote ``no.''
Mr. ROE of Tennessee. Mr. Speaker, the average Social Security
recipient in this country gets $1,300. We have 29 percent of the
people, millions of people over the age of 55, with no savings.
I don't believe for 1 minute anybody in this Chamber actually
believes a 1,000-page bill is going to make that easier to do and less
expensive to do. I have never seen that in the history of the world.
I yield 1 minute to the gentleman from New Hampshire (Mr. Guinta).
Mr. GUINTA. Mr. Speaker, I stand today in strong support of H.J. Res.
88, disapproving the harmful rule submitted by the Department of Labor.
It is 1,000 pages to define one word. No wonder the American people
are angry and frustrated with Washington, D.C. They should be. I think
people are a little bit smarter, and understand the term ``fiduciary.''
This rule threatens small businesses and individual savers by
replacing current regulations dealing with investment advice.
But we want to make sure, of course, that consumers are being
protected and given the best advice possible when it comes to their
financial security, but the DOL rule is not the way to do it.
I am concerned that the Department proposal would be particularly
harmful to low- and middle-income working American families looking for
options to save, to invest, and to plan for their future.
Compliance with this rule would limit educational opportunities for
individual retirement accounts and retirement savings plans, since
distribution of materials about these services would be considered
providing recommendations. That just doesn't make sense to me.
The proposal would actually make it much more difficult for people in
my district and people across the country to save for their future.
The cost of compliance is significant. I urge my colleagues to vote
for this joint resolution.
Mr. SCOTT of Virginia. Mr. Speaker, we possibly have two more
speakers.
Will the gentleman from Tennessee advise me how many more speakers he
has remaining.
Mr. ROE of Tennessee. Mr. Speaker, we have six remaining.
Mr. SCOTT of Virginia. Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 2 minutes to the
distinguished
[[Page H2088]]
gentleman from Wisconsin (Mr. Duffy).
Mr. DUFFY. Mr. Speaker, it is interesting listening to this debate.
My friends across the aisle are telling me that this is going to help
Americans.
Well, being creative, I can think of a few Americans that this will
help: the loggers in north Wisconsin who are cutting wood and the
papermakers in Wisconsin. It will help them for all the copies of this
1,000-page bill. Also, it will help the trial bar. If you look at a
1,000-page rule, how does anybody comply with that?
The Department of Labor doesn't understand this rule. No one across
the aisle understands this rule. So when a small-town investment
adviser breaks this 1,000-page rule, in comes the trial bar and sues.
It is a giveaway to the trial bar.
Listen, we have had this conversation all afternoon. This is going to
hurt middle-income, low-income individuals, low-income savers.
Listen, if you are a millionaire or a billionaire, don't worry. You
are going to be fine. You are still going to get that personalized
financial advice.
But if you are someone in my district, guess what they are going to
say. Your financial adviser will say: I am sorry, sir. I can't service
you anymore. I can't give you advice.
So what are my friends across the aisle going to ask my constituents
to do? They will be asked to sign up online for a robo-adviser where
they will answer 8 to 10 questions and the computer will spit out
advice for them. They get computer advice, not personal advice.
So when people make erratic decisions, bad decisions, when markets
move, you get your computer advising you. Instead of calling a person,
an adviser who says, ``Listen, you are not going to retire for 10, 15,
or 25 years, don't sell right now. Now is not the time to sell. Hold
on,'' you don't get that advice because you have a computer.
I think we have to look at the real intent of this law. Less people
are going to save, and more people are going to save even less.
So, at the end of the day, you are going to see Americans enter into
their retirement years without having a little nest egg for their
retirement, which means more Americans are going to be more reliant and
more dependent on the government, which is what this has all been
about: more government reliance.
Let's make sure we empower our citizens, our people, to get financial
advice and be treated fairly and honorably by the men and women who
serve our communities and our constituents.
Mr. SCOTT of Virginia. Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the
distinguished gentleman from Arkansas (Mr. Hill).
Mr. HILL. Mr. Speaker, I rise in support of this joint resolution.
While this rule may be well intended, its effects will lead to higher
fees, lack of diversity and choice, limiting access to professional
retirement planning and guidance for those who need it the most, low
balance, smaller investors trying to save every month for their
retirement.
I have long believed that the Securities and Exchange Commission is
the governing agency most expert and should have been taking the lead
on this project of the fiduciary rule. The administration should have
insisted on it.
Instead, they have been off track for 5 years. We are left with a
1,000-page rule that creates a confusing, bifurcated set of standards
that will confuse investment advisers and their clients trying to save
for retirement. Americans need more affordable retirement choices, not
less.
I thank the gentleman from Tennessee and Mrs. Wagner for their work
on this effort.
Mr. SCOTT of Virginia. Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the gentleman
from New Jersey (Mr. Lance), a fellow classmate of mine.
Mr. LANCE. Mr. Speaker, I commend Dr. Roe for his significant effort
in this regard.
I oppose the Department of Labor's recently finalized fiduciary rule.
The new regulations will generate nearly 57,000 paperwork hours per
year and cost Americans billions of dollars in duplicative fees.
It will hurt hardworking, middle-class American families as a similar
rule hurt hardworking, middle-class British families. We have proof of
this based upon what has happened in England.
Bipartisan legislation already advancing in the House protects access
to affordable retirement advice, and that is the appropriate way to
implement changes in the law.
I urge all my colleagues to support H.J. Res. 88 and oppose this most
recent effort by the executive branch to bypass Congress and the
American people and enact controversial policy by fiat.
Mr. SCOTT of Virginia. Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the
distinguished gentlewoman from California (Mrs. Mimi Walters).
Mrs. MIMI WALTERS of California. Mr. Speaker, the Department of
Labor's fiduciary rule serves no purpose other than to make it more
challenging for hardworking Americans to plan for retirement. This ill-
advised rule will limit choice and access for those who seek financial
advice to prepare for their future.
It will be especially damaging to middle-class families who will lose
access to affordable retirement advice, and it will discourage small
businesses from helping their employees save for retirement.
Saving for the future is difficult enough, and now this out-of-touch
administration is stepping in to make it even more challenging. We can
and we must get Washington out of the way.
Americans cannot afford to have the Federal Government interfering in
their retirement planning. Under the Congressional Review Act, we can
prevent implementation of this harmful rule. Congress should do
everything it can to empower Americans to secure their future.
I urge my colleagues to support H.J. Res. 88 to stop this misguided
government intervention and allow the American people to achieve their
retirement dreams.
Mr. SCOTT of Virginia. Mr. Speaker, I include in the Record the
Statement of Administration Policy. It notes that ``The outdated
regulations in place before this rulemaking did not ensure that
financial advisers act in their clients' best interest when giving
retirement investment advice. Instead, some firms have incentivized
advisers to steer clients into products that have higher fees and lower
returns . . .''
Statement of Administration Policy
H.J. Res. 88--Disapproval of Department of Labor Rule on Fiduciary
Responsibility of Financial Advisers--Rep. Roe, R-TN, and 30 cosponsors
The Administration strongly opposes H.J. Res. 88 because
the bill would overturn an important Department of Labor
final rule critical to protecting Americans' hard-earned
savings and preserving their retirement security.
The outdated regulations in place before this rulemaking
did not ensure that financial advisers act in their clients'
best interest when giving retirement investment advice.
Instead, some firms have incentivized advisers to steer
clients into products that have higher fees and lower
returns--costing American families an estimated $17 billion a
year.
The Department's final rule will ensure that American
workers and retirees receive retirement advice in their best
interest, better enabling them to protect and grow their
savings The final rule reflects extensive feedback from
industry, advocates, and Members of Congress, and has been
streamlined to reduce the compliance burden and ensure
continued access to advice, while maintaining an enforceable
best-interest standard that protects consumers. It is
essential that these critical protections go into effect.
If the President were presented with H.J. Res. 88, he would
veto the bill.
Mr. SCOTT of Virginia. Mr. Speaker, we have two additional speakers,
but they are not here yet.
I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 1 minute to the
distinguished gentleman from Illinois (Mr. LaHood).
Mr. LaHOOD. Mr. Speaker, I rise in support of the H.J. Res. 88.
The Department of Labor's fiduciary rule would significantly affect
constituents in my district. State Farm insurance in Bloomington,
Illinois, is headquartered in my district.
State Farm and its agents all across this country offer services and
products to help low- and moderate-income investors make the best
decisions about their finances.
[[Page H2089]]
However, this rule by the Obama administration targets those service
providers and its agents. It would raise compliance costs, limit the
advice that companies can provide to their own employees, and penalizes
small businesses that want to provide their employees with a 401(k)
plan.
The bottom line is that this rule would drastically narrow the access
that hardworking Americans have to retirement advice, hurting middle
and working class families.
More bureaucratic burdens from the Obama administration in the form
of a 1,000-page regulation is not a recipe for economic growth in this
country. Stop choking the U.S. economy. Support this resolution.
Mr. SCOTT of Virginia. Mr. Speaker, I reserve the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield 2 minutes to the
distinguished gentleman from Pennsylvania (Mr. Kelly).
Mr. KELLY of Pennsylvania. Mr. Speaker, I rise in strong support of
H.J. Res. 88.
I have been here now for 5 years, and it always seems to be the same
theme: You poor, poor, stupid people. Only the government can help you
decide how you should get ready for your retirement. I don't think
there are any more 10 chilling words than: ``I'm from the government,
and I'm here to help you.''
We are looking at the dismantling of people who help everyday people
decide on retirement decisions. It is a very difficult thing to
navigate, but, yet, we think we can do it better here because we do
such a fantastic job.
My gosh, we are only $20 trillion in the red. Why wouldn't we advise
hardworking American taxpayers how they should prepare for their
retirement? We have already ruined their retirement for them.
It gets to the point of being a little bit stupefying to stand here
in the people's House and think that somehow the administration and the
Department of Labor came up with an 1,100-page definition of what the
fiduciary responsibility should be. Stunning. Stunning.
The real fiduciary responsibility remains with the House. It is our
responsibility to protect our hardworking American taxpayers. It is our
responsibility to make sure that hardworking American taxpayers who
advise people on their retirement should be allowed to exist. This is
going to put them out of business. Why? Because we know so much better
than they do.
This is misguided. This is misthought. This is about a bigger
government, a more intrusive government, a government that taxes you
more and serves you less. It is that simple.
{time} 1445
Mr. SCOTT of Virginia. Mr. Speaker, I yield myself such time as I may
consume.
I include in the Record a letter in opposition to the resolution, in
support of the rule, from a long list of consumer organizations, as
well as five pages of quotes from industry officials in support of the
rule.
Save Our Retirement,
April 26, 2016.
Re Oppose the Resolution to block DOL's final conflict of
interest rule.
Dear Representative: As organizations that support the
Department of Labor's (DoL) rule to update and strengthen
protections for retirement savers, we are writing to urge you
to oppose H.J. Res 88, the Resolution of Disapproval that
would block its implementation. This rule is a tremendous
accomplishment in the fight to improve our nation's
retirement income security and should be supported.
The rule will at long last require all financial
professionals who provide retirement investment advice to put
their clients' best interests ahead of their own financial
interests. By taking this essential step, the rule will help
all Americans--many of whom are responsible for making their
own decisions about how best to invest their retirement
savings--keep more of their hard-earned savings so they can
enjoy a more financially secure and independent retirement.
In promulgating this rule, the DoL engaged in an open and
inclusive process, and the final rule is better as a result.
Specifically, the DoL responded to congressional and industry
feedback by making significant revisions designed to
facilitate implementation and compliance, while minimizing
the harmful impact of conflicts of interest on the quality of
retirement investment advice.
Small account holders and moderate-income retirement savers
stand to benefit most from this rule. The academic literature
makes clear that it is the less wealthy, frequently
financially unsophisticated retirement savers who are most at
risk when it comes to investment recommendations that are not
in their best interests. Often, those recommendations promote
investment products with high costs, substandard features,
elevated risks or poor returns. While the financial adviser
may make a substantial profit off these recommendations, the
retirement saver pays a heavy price for investment advice
that is not in his or her best interest, amounting to tens or
even hundreds of thousands of dollars in lost retirement
income.
Strengthening the protections for hard-working Americans
who try to save for a secure and independent retirement is a
key priority for our organizations, and to its credit, the
DoL has worked diligently to make important and needed
changes to an outdated rule. We urge all Members of Congress
to join us in supporting this common sense and long overdue
initiative and to reject this effort to block its
implementation. Your hardworking constituents deserve no
less.
Sincerely,
AARP, AFL-CIO, Alliance for Retired Americans, American
Association for Justice, American Association of University
Women (AAUW), American Federation of Government Employees,
American Federation of State, County and Municipal Employees
(AFSCME), Americans for Financial Reform, Association of
University Centers on Disabilities, Better Markets, B'nai
B'rith International, Center for Economic Justice, Center for
Responsible Lending, Committee for the Fiduciary Standard;
Consumer Action, Consumer Federation of America, Consumers
Union, Demos, International Association of Machinists and
Aerospace Workers, International Brotherhood of Boilermakers,
International Brotherhood of Electrical Workers,
International Union, United Automobile, Aerospace, &
Agricultural Implement Workers of America (UAW), Justice in
Aging, Leadership Conference on Civil and Human Rights, Main
Street Alliance, Metal Trades Department, AFL-CIO, National
Active and Retired Federal Employees Association (NARFE),
National Committee to Preserve Social Security and Medicare,
National Consumers League;
National Council of La Raza, National Women's Law Center,
OWL--The Voice of Women 40+, NAACP, National Education
Association, Pension Rights Center, Public Citizen, Public
Investors Arbitration Bar Association, Rebalance IRA, SAFER
UMass Amherst (SAFER: A Committee of Economists and other
Experts for Stable, Accountable, Fair and Efficient Financial
Reform), Service Employees International Union (SEIU), Social
Security Works, United Food and Commercial Workers, United
Steel, Paper and Forestry, Rubber, Manufacturing, Energy,
Allied Industrial and Service Workers International Union
(USW), U.S. PIRG, Woodstock Institute, Young Invincibles.
FINRA: The Financial Industry Regulatory Authority, the
self-regulatory agency overseeing brokerage firms, was one of
the most vigorous critics of the Labor Department's proposed
fiduciary rule. The group ``filed one of the most pointed
comment letters last summer about the proposed rule, which
would require advisers to 401(k) and individual retirement
accounts to act in the best interests of their clients,''
Investment News' Mark Schoeff Jr. reports. But the final rule
gave big concessions to brokers, leading Finra's leader to
effectively bless the new rule Friday. The organization's
chair and chief executive Richard G. Ketchum told an audience
at the Brookings Institution that the final rule is a ``big
improvement.'' (Politico)
John Thiel, Head of Merrill Lynch Wealth Management: ``We
are pleased that Secretary Perez and the Department of Labor
staff have worked to address many of the practical concerns
raised during the comment period. Most important, we support
a consistent, higher standard for all professionals who
advise the American people on their investments. As we study
the details of the final rule, we hope to continue what has
been a constructive dialogue with the Department about how to
implement a best interest standard effectively and
efficiently for the benefit of our clients, advisors and
shareholders.'' (WSJ)
TIAA: ``Putting the customer first is a core TIAA value,
and we believe adhering to a best interest standard under the
Department's new regulation is an important way to help more
people build financial well-being. IRAs are a key part of
creating retirement security, so we agree with the
requirement that distribution advice be subject to the same
fiduciary standard as all other investment advice. This will
ensure that rollover discussions, including whether to roll
over from an employer-sponsored plan to an IRA, are always in
employees' and retirees' best interest. Based on our
preliminary analysis, it appears the Department has gone a
long way toward making the best interest standard the
industry standard. TIAA supports this direction, and we look
forward to reviewing the full rule.'' (Statement)
LPL Financial Holdings Inc., which provides brokerage
services to more than 14,000 independent advisers, said it
was pleased with the Labor Department's changes to the
fiduciary rule. ``In particular, we are encouraged by the
increased time frame for implementation, the ability to
easily enter into the best interest contract with our
existing clients, and the freedom to recommend any assets
that are appropriate to help investors save for retirement''.
(WSJ)
Ray Ferrara, Chairman and CEO, ProVise Management Group:
``It's quite workable,''
[[Page H2090]]
says Ferrara, whose practice serves many small businesses and
mid-level investors in the retirement space. ``Under the best
interest contract exemption, firms and advisors can continue
to receive commissions for the sales of financial products
and for the advice and services they provide--they just have
to make sure that the commissions are reasonable and that
their advice is not influenced by the level of compensation
they receive.'' (www.provise.com)
Jim Weddle, Managing Partner, Edward Jones: ``We've been
adapting to new rules forever. The difference this time is
that our compliance with the new rule will also grow the
public's trust and confidence.'' (Statement)
Morgan Stanley: ``Putting clients' interests first is a
core value of Morgan Stanley. While it will take some time to
analyze all of the rule's details, we have been planning for
it since it was initially proposed and have been making
investments in the systems and technology that will enable us
to offer compliant solutions to clients whose retirement
accounts are affected.'' (Investment News)
Financial Planning Coalition: ``The Financial Planning
Coalition opposes any effort by Congress to thwart the
Department of Labor's final fiduciary rule, which reflects
extensive public comment and articulates common-sense
standards for ensuring financial advice in consumers' best
interest. Initial reactions from many financial services
firms and professionals--across business models--have been
largely supportive and focused on implementation rather than
opposition. We strongly urge Congress to step back, respect
the comprehensive feedback process, and not to interfere with
final implementation of this important rule to benefit
millions of American retirement savers.'' (Statement)
Financial Engines: ``The new conflict of interest rule is
an important step forward in our nation's retirement security
and has the potential to positively impact retirement
investors, regardless of their wealth or investing
experience,'' said Larry Raffone, president and chief
executive officer of Financial Engines. ``Financial Engines
has always believed that it is not only possible, but
absolutely necessary, for retirement advisors to provide un-
conflicted advice and guidance to their clients. That's why
we've made a point of operating as a fiduciary for our
clients since founding 20 years ago.'' (Statement)
National Association of Insurance and Financial Advisors:
``NAIFA members and others within the insurance and financial
services industry worked diligently with the Department of
Labor to address many concerns we had with the DOL's draft
rule,'' said Jules Gaudreau, president of the National
Association of Insurance and Financial Advisors. ``We
appreciate that DOL has accepted many of NAIFA's suggestions
and reworked some portions of the rule to address concerns
raised during the review process.'' (Statement)
The Rebalance IRA Investment Committee (Dr. Charles D.
Ellis, Dr. Burton G. Malkiel, Scott Puritz, Managing
Director, Mitch Tuchman, Managing Director, and Jay Vivian):
As members of the financial advisor community, we are writing
to express our appreciation for the leadership and hard work
that you have devoted to the fiduciary duty rule just
released by the U.S. Department of Labor. This
extraordinarily important reform will protect millions of
hard working Americans from the conflicts of interest that
annually siphon away billions of dollars of hard-earned
retirement savings due to inflated commissions and poor
returns. (Letter)
Karen Barr, CEO, Investment Adviser Association: ``The IAA
is pleased to see that the Department of Labor clearly
recognizes that many advisers already commit to providing
high-quality advice that always puts their client's best
interest first. We have long believed that the fiduciary
standard should be applied to all financial professionals
giving investment advice. Our members, SEC-registered
investment advisers, are already held to that standard. The
IAA is also pleased to see that--based on preliminary
information--the DOL appears to have taken many of our most
significant concerns with the proposal into account. For
example, the IAA and others commented that the proposal
appeared to favor low-fee and low-cost--typically passively
managed--investments over all else, ignoring returns,
quality, and other factors that may be important to
investors. The DOL expressly acknowledges that it did not
adopt the low-fee streamlined option considered in the
proposal because of that concern, and further clarified that
the adviser is not required to recommend the lowest fee
option if another investment is better for the client. These
are welcome changes. We also welcome the DOL's clarifications
on the timing of fiduciary status, as it appears that the
final rule makes it clear that ``hire me'' discussions that
do not include investment recommendations are not fiduciary
recommendations.'' (Statement)
Jon Stein, CEO, Betterment: ``We support this rule for a
lot of reasons. We've actually been engaged and involved with
the Department of Labor and the OMB for a while supporting
this rule,'' Stein told CNBC's ``Closing Bell.'' ``It's an
unambiguous public good. This is one of the most exciting
things to happen for investors in 40 years.'' (Business
Insider)
Triad Advisors: ``We're in the process of reviewing the
details of this recently finalized rule, but one thing is
clear: Delivering maximum choice and flexibility in business
and compensation models to independent advisors is more
crucial than ever before. We're confident that our firm's
focus since we were founded on supporting hybrid advisors
uniquely positions Triad Advisors to best serve the evolving
needs of independent advisors in this new regulatory
landscape. We're also encouraged on a preliminary basis with
modifications from previous versions of the rule in its final
version, which seem to reflect the willingness of the DOL to
listen to our industry and the investing public on a range of
key issues.'' (Statement)
Legg Mason: Jeff Masom, co-head of sales for asset manager
Legg Mason Inc. said the Labor Department had ``certainly
made a lot of concessions'' including giving firms more time
to comply and grandfathering in existing investments. While
the rule is likely to require ``a lot of time and expense''
from intermediaries, Mr. Masom said Legg Mason is optimistic
about the impact of the rule on its business. He said the
firm benefits from not offering retirement plan record-
keeping services and being a ``pure'' investment manager with
a mix of products, some of which are low-cost. ``Competing
with passive has always been on the table. Active managers
always has to justify their fees. Nothing has changed on that
front,'' Mr. Masom said. (WSJ)
Cetera Financial Group: ``Cetera has been aware of the
broad brush strokes of the DOL rule for some time now, and we
have been actively positioning our advisors to transition
this situation from an obstacle to an opportunity. We have
been utilizing our industry-leading scale and resources to
develop multiple new tools and platforms to prepare our
advisors for how to best operate their businesses and enjoy
continued success in this new regulatory environment.
Preliminarily, it appears the rule includes modifications
that indicate the DOL has considered some of the industry's
concerns. However, we will be studying the newly released
details of the final rule in the coming days, and from there,
we will announce a number of our initiatives to support
advisors in this area in the coming weeks.'' (Statement)
Jason C. Roberts, CEO, Pension Resource Institute, and
Partner, Retirement Law Group: ``Based upon our initial
review, we believe that many of the challenges in the
proposal have been modified to be more workable. We are
sifting through the details but are generally encouraged--
particularly with the lower bar for fee-based IRA rollovers
and the extended timeline for implementation. We will be
begin updating PRI's member firms next week and start
developing the required forms, agreements, disclosures,
policies and training in the coming months.'' (Investment
News)
Morningstar: Scott Cooley, direct of policy research at
investment-research and investment-management firm
Morningstar Inc., said: ``One of my fears was that people who
had already had paid a commission on their retirement
accounts would be moved into fee-based accounts and then have
to pay 1% of assets a year after they had already paid a
commission.'' But the DOL has ``indicated that it would have
to be in the best interest of the client to shift them to a
fee-based account from a commission-based account. That's
unambiguously pro-consumer.'' Mr. Cooley also said that
because the final rule incorporates the financial-services
industry's comments, ``It will be harder for people in the
industry to argue that the DOL didn't take their feedback
into account. I suspect the DOL drafted this with an eye
towards potential court challenges.'' (WSJ)
Evensky & Katz: Harold Evensky, chairman of financial-
advisory firm Evensky & Katz who champions the fee-only,
fiduciary approach to financial advice and planning and who
has long supported the rule, said: ``The DOL has indeed taken
a major step toward a more secure and dignified retirement
for millions of Americans. In addition, the DOL has obviously
carefully listened and responded to the concerns raised by
many financial service participants regarding the original
proposal including easing the compliance process but
maintaining a strong, legally enforceable best interest
standard.'' He added: ``At this stage it seems that the
Department of Labor's years of effort will be a major win for
investors.'' (WSJ)
RBC Capital Markets: In an unexpected positive change for
the industry, RBC Capital Markets said in a research note,
the requirement that financial advisers enter into a separate
fiduciary contract with customers when dealing in the
retirement area got scrapped. Another positive: The Labor
Department expanded the universe of 401(k) and other
retirement plans that would be exempt from the new rule. The
draft proposal would have covered plans under $100 million in
assets, while the final rule drops that threshold to $50
million. RBC said annuity companies including Lincoln,
MetLife and Prudential ``would still see a negative hit to
variable annuity sales--although the impact would likely be
slightly less than if the draft had been left unchanged.''
(WSJ)
UBS Group: Scaling back aspects of the rule will likely
boost the stocks of the very firms most affected by the
tighter restrictions, a team of researchers at UBS Group AG
said in a research note. ``While the thrust of the rule
remains unchanged and we still see longer-term headwinds, we
believe the rule's softening could provide a relief rally in
many of the most impacted stocks including asset managers,
life insurers and [independent broker-dealers],'' the UBS
researchers wrote. They based their analysis on a fact-sheet
distributed by the Obama administration. (WSJ)
[[Page H2091]]
Bob Gerstemeier, President, Gerstemeier Financial Group:
``The responsibility of putting my clients' interests first
will have little impact to the way I operate,'' he says.
``Ultimately, I think the new regulations requiring advisors
to make more disclosures and put clients' interests first
will not only make our profession better, it will ensure that
more Americans receive competent, trusted and appropriate
advice.'' (www.provise.com)
Guild Investment Management ``At Guild, which is an SEC-
registered investment advisor, we have adhered to fiduciary
standards for our entire life as a firm (more than four
decades), and we certainly welcome the expansion of these
standards, which we view as simple and fair common sense.''
(www.equities.com)
Rob Foregger, Co-founder, NextCapital: Rob Foregger, co-
founder of Next Capital, says the Labor Department ``made
very sensible amendments to the proposed rule. The final
result strikes the right balance.'' ``The new DoL fiduciary
rule is a major step forward for the modernization of the $17
trillion retirement industry--and perhaps the largest
overhaul to the investment management industry in nearly
three decades,'' he added. ``The DoL went to great lengths to
integrate the productive feedback from the financial
industry, while ensuring that a true fiduciary standard of
care was enacted.'' (www.nasdaq.com)
United Capital: The Labor Department's fiduciary rule is an
important step in providing more disclosure to investors, but
``this should really be viewed as a step one,'' says Terry
Siman, a lawyer and a managing director with wealth-
management firm United Capital Financial Advisers LLC who has
supported the rule. ``It takes a long time to make the
cultural shifts'' of moving the industry toward providing
greater transparency, he said. Mr. Siman added the new rule
would give retirement savers a boost by putting their
interests ahead of advisers, while also empowering them to
ask for more information around costs and conflicts of
interest. ``The consumer ultimately will benefit, it's just
going to be first and foremost the responsible consumers who
know'' to ask their advisers for that additional
information,'' said Mr. Siman. (WSJ)
Andrei Cherny, CEO, Aspiration: ``I've seen first-hand that
the wheels of government can move slowly--especially when
there are thousands of lobbyists and many millions in
campaign contributions working against progress. But the new
fiduciary role from the Department of Labor is a big step in
the right direction. The financial industry is one of the
least trusted in America--for some very good reasons. Too
often, conflicts of interest lead to a `heads I win, tails
you lose' game where people's very livelihoods are on the
line.'' (Statement)
Wells Fargo: ``Wells Fargo has been an active advocate for
our clients and financial advisors during the DOL's rule-
making process. We have a robust plan in place for reviewing
the final rule, which we hope will reflect the suggestions
that we and others have offered in order to avoid unintended
negative impacts on investors. Wells Fargo has long supported
a best interest standard and believes that professional
financial advisors have a crucial role to play in encouraging
retirement saving and investing. As one of the largest and
strongest financial services companies, we enjoy a distinct
advantage in our ability to adapt to this change.''
(Investment News)
Mr. SCOTT of Virginia. Mr. Speaker, there are two points that I would
like to make. One is that when all you can complain about is the size
of the bill, you know you have a very weak argument.
Second, they mentioned the United Kingdom. As I understand the United
Kingdom plan, they banned commissions, so it is not the same thing.
This rule will allow commissions if those commissions are in the best
interests of the consumer.
Mr. Speaker, last week the Committee on Education and the Workforce
hastily marked up this joint resolution only 48 hours after it was
introduced. This week the House majority has rushed it to the floor for
a vote, only 21 days after the rule was published. According to the
Congressional Research Service, that is one-fifth of the average time
between the time a final rule is issued or published and when the CRA
vote occurs.
If anyone has concerns about the rule, those concerns can be
addressed to the Department of Labor, and the Department can issue
clarifications and guidance. But instead of reserving judgment and
seeking clarification, this resolution is offered and would have the
effect of not only rejecting this rule, but any similar rule in the
foreseeable future.
This joint resolution may pass the House today and may pass the
Senate next month, but the President will veto it. There are not the
votes to override the veto, so that is simple arithmetic. We are just
wasting our time.
Instead of wasting time on this sure-to-be-vetoed joint resolution,
the House should be helping working people make ends meet and better
provide a future for their children and grandchildren. We should be
taking up legislation that would boost workers' wages, help workers
achieve a better balance between work and family, level the playing
field by strengthening protections from discrimination so everyone has
a fair shot, and strengthening workers' ability to have a safe and
secure retirement. All of that will be the focus of House Democrats.
For now, I urge my colleagues to protect workers' hard-earned
retirement funds by voting ``no'' on this resolution.
Mr. Speaker, I yield back the balance of my time.
Mr. ROE of Tennessee. Mr. Speaker, I yield myself the balance of my
time.
I want to thank the gentleman from Virginia (Mr. Scott) for the
civility of this debate.
In closing, I want to remind my colleagues that a ``yes'' vote on
this resolution will protect access to affordable retirement advice and
allow us to get back to delivering real solutions that will empower
every American to save for the future.
Mr. Speaker, I don't think it is wasting time to help and protect
working families and small businesses from this onerous rule that may
actually prevent them from saving for the future. As we have said here
on the House floor, almost a third of all Americans--and it distresses
me every day--do not have any retirement savings or pension plan. They
are looking at $1,300 a month in Social Security to live a very long
time. Our life expectancies are going up, so we should be doing
everything we can to help people and make it easier for them to save
for retirement.
I started a small medical practice--joined four other doctors--almost
40 years ago now. We started out with a very small pension plan for all
of our employees. It was a broker-dealer investment situation. We have
now grown that to 450 employees, and we have a totally different
arrangement because we have a different business model now.
Higher income and higher earning people, like myself, don't have to
worry about this rule. It will not affect us. It will affect small
businesses that are trying to get started and individuals like my
children who are out there starting their pension plans.
If you believe, as I do, that the American people deserve better than
a flawed rule that will wreak havoc on workers and retirees, I urge you
to support this resolution.
Mr. Speaker, this is a 1,000-page bill to define one word. This is a
Webster's dictionary that defines every word in the English language,
which is only slightly bigger than that 1,000-page bill right there. I
don't think anybody believes that is going to make it easier for people
to retire in this country.
On behalf of every American family, I urge you to stand up for
affordable retirement advice and support H.J. Res. 88.
Mr. Speaker, I yield back the balance of my time.-
Ms. JACKSON LEE. Mr. Speaker, I rise in opposition to H.J. Res. 88, a
joint resolution disapproving the rule promulgated by the United States
Department of Labor relating to the definition of the term
``fiduciary.''
I oppose this resolution because it seeks to nullify a rule that was
years in the making and which provides common sense protections for
consumers by simply requiring retirement advisors to put the best
interests of their clients above their own financial interests.
Currently, these retirement advisors are only required to recommend
``suitable'' investments, which means they can recommend investments
that offer them a higher commission even where an otherwise identical
investment with a lower commission is available.
Under current rules and regulations, this is all perfectly legal--but
highly unfair, especially middle-class seniors dependent upon the
investment income from the hard-earned money they saved during their
working years and entrusted to a financial advisor.
Because those outdated regulations did not ensure that financial
advisers act in their clients' best interest when giving retirement
investment advice, some firms have found it profitable to incentivize
their advisers to steer clients into products that have higher fees and
lower returns at a cost to American families of approximately $17
billion a year.
The Fiduciary Rule issued and published by the Department of Labor
(DOL) on April 8,
[[Page H2092]]
2016, bans these practices and removes the incentive for financial
advisors to put their pecuniary interest ahead of their client's
proprietary interest.
Mr. Speaker, it is worth noting that DOL's Fiduciary Rules was
thoughtfully, responsibly, and transparently crafted over several years
in conjunction with hundreds of meetings on the rule with industry
professionals and the public and after considering more than 3,000
public comments over a six-month period from the American people.
In comparison, House Republicans quickly convened a markup only two
days after H.J. Res. 88 was introduced and only thirteen days after the
rule was finalized and published.
This clearly shows that Republicans in Congress are more interested
in attacking the Obama Administration than acting to safeguard the
hard-earned retirement savings of the American people and working to
ensure those savings are protected.
The DOL's fiduciary rule simply guarantees that those entrusted with
the savings of millions of Americans act in the best interests of their
clients.
The Department of Labor has done right by the American people.
Now it is time for this House to do right by the American people by
rejecting H.J. Res. 88 and leaving the DOL Fiduciary Rule in place.
Mr. DeFAZIO, Mr. Speaker, investment advisors in my district have
contacted me expressing concern that the Department of Labor's
fiduciary rule as currently written would make it difficult to continue
serving clients with smaller portfolios. However, every investor
deserves to be protected from bad actors who sell them products that do
not fit their needs. The Department of Labor should continue to work
with all stakeholders to craft a fair rule. The bill before us would do
nothing to correct the rule, tying the Department's hands from
establishing safeguards that work for everyone. It's unlikely the
Senate will act on the bill. If they do, the President has indicated he
will veto it. Our time would be better spent improving the rule to make
certain investors are protected without diminishing advisors' ability
to serve their clients.
Mr. GENE GREEN of Texas. Mr. Speaker, I rise in strong opposition to
H.J. Res. 88.
One of the biggest concerns I hear from my constituents in Houston
and Harris County, Texas is having enough money for retirement. For
decades, we have seen the private sector moving their employees from
defined benefit to defined contribution retirement plans. Now we're
seeing growing pressure to move public sector workers onto defined
contribution plans as well.
Even more concerning is the current effort by multiemployer pension
funds, like Central States, to pull the rug from under retirees and
slash their pensions by hundreds of thousands of dollars.
This pattern has troubled me for years and I hope Congress will take
action to ensure workers in Houston and Harris County and throughout
our great country who have worked for decades get the secure retirement
they deserve.
If American families are going to be required to secure their
retirement in the private market, at the very least, they ought to have
peace of mind that they are getting the best advice from financial
professionals.
The Labor Department and Secretary Tom Perez worked for years to put
together a fair and balanced rule that will ensure that when it comes
to saving for retirement, customers--in other words, the American
people--come first by holding advisers and brokers to a fiduciary
standard.
The Council of Economic Advisers has reported that due to loopholes
that had been on the books for 40 years, conflicted advice and hidden
fees have cost American families $17 billion a year in lost retirement
savings. These conflicts of interest can cost a retiree almost one-
fifth of their savings by age 65.
I ask my colleagues on both sides of the aisle today to stand with
our nation's retirees and working families and vote down this
irresponsible resolution.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 706, the previous question is ordered on
the joint resolution.
The question is on the engrossment and third reading of the joint
resolution.
The joint resolution was ordered to be engrossed and read a third
time, and was read the third time.
The SPEAKER pro tempore. The question is on the passage of the joint
resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. SCOTT of Virginia. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
____________________