Testy Responses Between DOL Chief, House Members

WASHINGTON – “Outrageous” was how a ranking Republican House member called the economic justification crafted by the Council of Economic Advisers on the proposed Department of Labor (DOL) fiduciary rule. Another House member reminded the Secretary of Labor that Congress specifically had barred the agency from using its resources to develop such a regulation.

That was the intensity that greeted Secretary of Labor Thomas E. Perez as he appeared this week before House committees over the agency’s proposal to create a regulation imposing a new standard of care on sale of investment products into retirement accounts.

It was Rep. Phil Roe, R-Tenn., chairman of Subcommittee on Health, Employment, Labor and Pensions of the House Education and Work Force Committee who made the terse comment about the economic basis for the proposed rule at a full committee hearing today.

And, it was Rep. Hal Rogers, R-Ken., chairman of the House Appropriations Committee who noted that a new DOL fiduciary standard “could have wide-reaching implications.”

At a Tuesday hearing of the Labor, Health and Human Services, Education, and Related Agencies Subcommittee, Rogers also questioned the DOL’s authority to establish such a standard. He said Congress gave the SEC the authority to oversee “key participants” in the “securities world,” including broker/dealers, investment advisors and mutual fund managers.

Rogers also said that SEC Commissioner Daniel M. Gallagher had called DOL’s initiative to establish a new fiduciary standard a “runaway train,” and said Gallagher had indicated that the DOL “had never formally engaged” the Securities and Exchange Commission (SEC) about his proposal.

In response, Perez said he had worked with SEC Chair Mary Jo White, and with SEC staffers, and had never had any contact with Gallagher.

Rep. Bradley Byrne, R-Ala., said that currently, “more advice is needed, not less,” and a new standard of care would create “more need, but less capacity.”

InsuranceNewsNet Washington Bureau Chief Arthur D. Postal has covered regulatory and legislative issues for more than 30 years. He can be reached at [email protected].