SEC commissioner rips 'propaganda' from the White House on regs

A top government regulator blasted the White House on Friday as having authored a "thinly veiled propaganda" memo to garner support for new financial regulations.

Securities and Exchange Commission (SEC) Commissioner Daniel Gallagher offered a blistering critique of the White House's push for new regulations on financial advisers under what as known as "fiduciary standards" for the industry.

"To be blunt, the White House memo is thinly veiled propaganda designed to generate support for a widely unpopular rulemaking," Gallagher said Friday at a forum in Washington.

The Hill first reported in January that Council of Economic Advisers Chairman Jason FurmanJason FurmanBiden administration eyeing long-term increase in food stamps: report Biden, like most new presidents, will get his shot at economics Our rebounding economy doesn't need more stimulus checks MORE and CEA member Betsey Stevenson co-authored a memo that indicated the administration wanted Department of Labor officials to move ahead with the fiduciary regulations.

Gallagher — a Republican appointed to the SEC by President Obama in 2011 — said the Labor Department “has not formally engaged the [SEC] commissioners" in the process. Business officials have made that point for months, noting that the Department of Labor (DOL) and SEC have split jurisdiction on the issue.

"I believe this coordination has been nothing more than a 'check the box' exercise by the DOL designed to legitimize the runaway train that is their fiduciary rulemaking," Gallagher said.

The business community opposes the new regulations, which failed to gain traction in 2010.

They argue that the rules would change the payment structure in such a way that it would limit access to financial advice among low- and middle-income Americans.

"If the DOL sticks with its approach to ban or effectively ban conflicts, entire categories of products and services that are now available to investors could disappear," Gallagher said.

Administration officials, backed by progressives and groups including the AARP and AFL-CIO, argue the new rules are needed to prevent financial advisers from earning lucrative commissions by selling bad advice.

A White House representative was not immediately available for comment.