One of President-elect Donald Trump’s first moves is likely to be working with House Speaker Paul Ryan on legislation to scrap the Department of Labor fiduciary rule, a Democratic strategist said this morning.
“Trump has a mandate to affect a lot of change,” said Michael Lewan, former chief of staff to Sen. Joseph Lieberman, D-Conn. “Specifically on the fiduciary rule, I would guess very quickly, maybe even on the first day or two of the next Congress you will see both the House and Senate repass legislation to repeal the fiduciary rule.”
The new Congress convenes Jan. 3.
President Barack Obama’s administration has been working on extending the fiduciary standard of care to all retirement account since early in his first term. After its first rule was withdrawn in 2010, the DOL published a new version in April.
So far, the rule has survived several lawsuits and is slated to begin taking effect on April 10, 2017.
What is less clear is how broker-dealers, insurance companies, insurance maintenance organizations (IMOs) and others will respond because they have been spending heavily for months to implement fiduciary systems and procedures.
Some firms have sold or eliminated divisions of advisors, while manufacturers are creating new products in anticipation of the rule.
It might be premature to declare the fiduciary rule dead, some analysts said. The first hint will come when Trump nominates his DOL secretary, said Diane Boyle, senior vice president of government relations with the National Association of Insurance and Financial Advisors.
Cabinet members will be nominated and confirmed starting in January.
One place to look for potential legislation is the Financial CHOICE Act passed in September by House Financial Services Committee. The sweeping financial reform bill seeks to replace the Dodd-Frank Act and kill the Department of Labor’s fiduciary rule.
At the time, Jeb Hensarling, R-Texas, committee chairman, hailed the bill as a remedy for "growth-strangling regulation.”
Among the many changes the bill proposes, it would block the DOL from implementing its new fiduciary rule by incorporating into the Retail Investor Protection Act, which passed the House last year. Introduced by Rep. Ann Wagner, R-Mo., the RIPA requires the Securities and Exchange Commission to move first on a fiduciary rulemaking before the DOL can act.
The bill eliminates several Dodd-Frank provisions, including federal "bailouts" and the Volcker Rule, which restricts trading activities at banks.
Under CHOICE -- which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs -- the Financial Stability Oversight Council would no longer be able to designate risky non-banks and others as “systemically important financial institutions."
“I think there will be some meaningful changes to Dodd-Frank,” Lewan said, but added of Trump: “Here’s a guy who won last night based on a populist message. Since he has no track record in economic issues, we really don’t know what he thinks or what he would do.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]
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