By Kevin Bogardus - 09/19/11 08:51 PM EDT
A member of the House’s New Democrat Coalition backed away Monday from introducing a resolution criticizing the Labor Department after it announced plans to re-propose a contentious financial adviser regulation.
Rep. Carolyn McCarthy (D-N.Y.) had planned to introduce a nonbinding resolution on Thursday that would have urged the department to re-propose its rule that would broaden the definition of “fiduciary.” The regulation was heavily lobbied against by the financial services industry since those within it believed it would change how advisers who handle Individual Retirement Accounts (IRA) were compensated, potentially raising costs and cutting off access to financial advice for investors.
McCarthy told The Hill that her resolution would have had bipartisan support and, though nonbinding, it “would have sent a very strong message.”
“There was no way of fixing this. They had to re-propose this,” McCarthy said. “This was not only going to be a big strain not just on businesses but on the consumer.”
Republican lawmakers also backed the Labor Department in re-proposing the regulation.
“The Labor Department’s decision to abandon its deeply flawed fiduciary proposal is good news for workers and retirees," said Rep. John Kline (R-Minn.), chairman of the House Education and the Workforce Committee, in a statement. "From the beginning, it was clear the costs and consequences of this far-reaching regulation would be harmful to those trying to build their retirement savings. I am pleased the administration has chosen to heed the concerns expressed by members on both sides of the political divide.”
McCarthy said she has been battling with the Labor Department for just about a year now, signing onto a May letter from the New Democrat Coalition that was sent to several Obama administration officials, including Labor Secretary Hilda Solis, complaining about the rule. The lawmaker said Labor should work with other federal agencies who are more familiar with financial services when they re-propose the rule.
“I want them to go back to talking to the [Securities and Exchange Commission], because of their oversight of the issue, and the [Commodity Futures Trading Commission],” McCarthy said. “They should coordinate with them to come out with the best rulings.”
McCarthy said Labor was not aware of how its proposed rule would affect investors.
“They didn't understand how this would affect the average consumer,” McCarthy said.