The House of Representatives approved broad-based financial overhaul legislation on June 8 that seeks to repeal major provisions of the Dodd-Frank Act, as well as the Department of Labor’s now-effective fiduciary rule.
Congressional Republicans have taken aim at repealing the Dodd-Frank Act since it was enacted in 2010, while most Democrats have resisted rolling back major sections of the law. The legislation was approved on a near party-line vote. It next moves to the Senate, where its chances for approval are remote, given the current political makeup of that chamber —52 Republicans and 48 Democrats. It takes 60 votes to end a filibuster, which would likely happen with this legislation as currently drafted.
In addition to repealing the DOL’s fiduciary rule, the 600-page Financial CHOICE Act (H.R. 10) would:
- repeal the so-called “Too Big to Fail” provisions that were a cornerstone of Dodd-Frank;
- repeal the “Volcker rule” prohibiting federally insured banks from making certain investments with their own funds;
- restructure the SEC and reform civil penalties for securities law violations;
- make certain amendments to the powers and operations of the Board of Governors of the Federal Reserve System; and
- rename and revamp the power structure of the Consumer Financial Protection Board (CFPB).
Legislative resources posted online include:
House Republicans Introduce Legislation to Repeal Fiduciary Rule
Also on June 8, House Education and Workforce Committee Member Phil Roe (R-TN) and Ways and Means Subcommittee on Tax Policy Chairman Peter Roskam (R-IL) introduced the Affordable Retirement Advice for Savers Act (H.R. 2823), legislation that would repeal the fiduciary rule.
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According to a summary, H.R. 2823 would:
- overturn the fiduciary rule;
- establish a statutory definition of “investment advice” and require financial advisors to serve their clients’ best interests;
- exempt advice from the prohibited transaction rules so long as only reasonable compensation is paid and certain disclosure requirements are met;
- provide an exemption from the prohibited transaction rules if, among other requirements, an advisor places the interest of the client above the advisor’s own; and
- permit advice regarding 401(k) distributions (including rollovers), so long as the advice is in the participant’s best interest.
While Friday, June 9 marks the new “official” effective date of the fiduciary rule, opponents are not giving up so easily, with the ongoing litigation, legislation to repeal the rule being introduced and acted on by Congress, and the Department of Labor issuing a Request for Information to begin a formal review of the rule. Nevertheless, it appears the rule is here to stay for a while.