By Peter Schroeder - 02/23/16 02:16 PM EST
Several House Democrats are airing their grievances with the Obama administration’s attempt to crack down on the work of retirement investment advisers.
With the regulatory initiative nearing the finish line, some lawmakers continue to express deep reservations with the “fiduciary rule” that is intended to protect people from unscrupulous financial advisers.
“It is vital that the proposal doesn’t limit consumer choice and access to advice, have a disproportionate impact on lower- or middle-income communities, or raise the costs of saving for retirement,” warned the original letter, which the nine Democrats re-sent to Office of Management and Budget (OMB) Director Shaun DonovanShaun DonovanOvernight Finance: Dems turn up heat on Wells Fargo | New rules for prepaid cards | Justices dig into insider trading law GOP reps warn Obama against quickly finalizing tax rules Obama requests .6B in aid for Louisiana floods MORE earlier this month.
The two-paragraph letter warns provisions of the rule could lead to “market disruptions” and prevent some people from obtaining investment advice.
The White House has been working to sew up Democratic support for the fiduciary rule, which has faced widespread opposition from the financial industry and leading business groups.
Labor Secretary Thomas PerezThomas E. PerezClinton’s top five vice presidential picks Government social programs: Triumph of hope over evidence Labor’s 'wasteful spending and mismanagement” at Workers’ Comp MORE, who spearheaded the rulemaking effort, is set to meet with House Democrats on Wednesday to discuss the regulation.
The administration is potentially within weeks of finalizing the rule, which has been years in the making. The regulation is under review at the OMB.
The nine Democrats who signed the latest letter to OMB were Reps. Tony Cárdenas (Calif.), Emanuel Cleaver (Mo.), Ron KindRon KindRyan: Pacific deal can't be fixed in time for lame-duck vote House Democrat expects support to grow for Pacific trade deal Hatch: TPP deal can get done in lame-duck session MORE (Wis.), Ann McLane Kuster (N.H.), John Larson (Conn.), Grace Meng (N.Y.), Gwen MooreGwen MooreLawmakers mourn Gene Wilder’s death Wisconsin Dem calls for calm in wake of Milwaukee police shooting Dems to Obama: End citizenship rule for education programs MORE (Wis.), Richard Neal (Mass.) and Kyrsten Sinema (Ariz.).
A Cárdenas spokesman said it was sent simply to reiterate members’ concerns about the rule being too broad.
Lawmakers have not seen the text of the regulation that Labor sent to the OMB, so they do not know which, if any, of their original concerns have already been addressed.
The Labor Department submitted its proposed rule to the OMB in January, after which it entered a review period of 60 to 90 days. Congress will then get the chance to review the final regulations before they take effect.
Regulators have tried for years to write rules that would require investment advisers for retirement plans to act solely for the benefit of their clients. The Labor Department had to scrap an earlier rulewriting effort after bipartisan opposition, and the project only got back on track after President Obama publicly threw his weight behind the initiative at the beginning of 2015.
Proponents of the rule argue that retirement investment advisers can steer clients towards pricey options that reap hefty commissions but aren’t the best investments.
"You should have the peace of mind that the advice you're getting is sound, that your investments are being protected," Obama said in a speech last year to the AARP.
By establishing rules forcing advisers to act solely in the clients’ best interests, the government can ensure American preparing for retirement aren’t taken advantage of, supporter say.
But critics, including Republicans, some Democrats and the financial industry, argue that such a rule would be onerous and could end up preventing some Americans from getting any retirement advice at all.
In particular, skeptics have warned that a restrictive rule could dry up retirement advice for middle- and lower-class Americans, while the wealthy could still find advice they can afford.
"In the real world — having sold financial products — the fact of the matter is that what they're going to do is eliminate experts for those who need it the most," Sen. Tim ScottTim ScottGOP senators avoid Trump questions on rigged election More Senate Republicans pressure Treasury over debt-equity rules Trump's implosion might be blessing in disguise for GOP MORE (R-S.C.) told The Hill last year.