So you thought the Department of Labor’s fiduciary rule was dead? Think again.
Democratic presidential candidate Michael Bloomberg wants to resuscitate the DOL rule if he becomes president, according to information he released in his financial reform policy.
The DOL rule, which originated during the Obama administration, expanded the definition of “investment advice fiduciary” under the Employee Retirement Income Security Act of 1974.
The rule automatically elevated all financial professionals who work with retirement plans or provide retirement planning advice in a client’s best interest, bound to meet the standards of a fiduciary status.
While the new rules were likely to have had at least some impact on all financial advisors, it was expected that those who work on commission, such as brokers and insurance agents, would be impacted the most.
After a series of legal challenges, as of June 21, 2018, the U.S. Fifth Circuit Court of Appeals officially vacated the rule, effectively killing it.
Restoring the fiduciary rule is not the only change to financial reform policy that Bloomberg wants to make if he is elected.
The candidate wants to introduce a 0.1% tax on all financial transactions, including stocks, bonds and payments on derivative contracts. The tax would be phased in gradually, starting at 0.02%.
He also plans to “restore” the Volcker Rule, the federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.
Bloomberg wants to reinstate “annual living wills,” in which large financial institutions must explain how they could go bankrupt without harming the broader economy -- and make the documents public.
The candidate said he favors toughening stress tests of the nation’s largest financial institutions. He also wants to impose added scrutiny and requirements on systemically important financial institutions -- such as insurers.
In addition, Bloomberg wants to “strengthen” the Financial Stability Oversight Council, which was created by the 2010 Dodd-Frank Act, as well as accelerate the creation of a Consolidated Audit Trail to record all transactions in financial markets and make them available for immediate analysis.
Bloomberg also takes aim at Fannie Mae and Freddie Mac, saying that he wants to gradually merge them into a single, fully government-owned mortgage guarantor.
He wants to “reinvigorate” the Consumer Financial Protection Bureau, offer a selection of financial services through the U.S. Postal Service, and establish a pilot program to offer affordable or free bank accounts with direct deposit to people when they sign up for public benefits, such as the Earned Income Tax Credit.
Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.