UPDATED 11:15 A.M. FEB. 6
President Trump has tackled the Labor Department’s fiduciary rule, just weeks ahead of the April 10 implementation date.
On Friday, Feb. 3, the President signed an administrative memorandum to the Secretary of Labor that directs the department to take necessary actions to review the rule and decide if it should be rescinded or revised.
Cautioning that the rule “may significantly alter the manner in which Americans can receive financial advice, and may not be consistent with the policies of my Administration,” the memorandum calls for an updated economic and legal analysis concerning the likely impact of the rule to examine:
- whether the rule has harmed or or is likely to harm investors due to a reduction in access to retirement accounts or advice;
- whether it has resulted in dislocations or disruptions within the retirement services industry that may adversely affect investors or retirees (a point has been made consistently in litigation challenging the rule); and
- whether it is likely to cause an increase in litigation and an increase in the cost of "retirement services."
In the event of an affirmative finding in any of those areas, the memorandum directs the DOL to issue a proposed regulation rescinding or revising the rule.
In his daily press briefing, White House press secretary Sean Spicer described the rule as "a solution in search of a problem," charged the Obama administration's Department of Labor with exceeding its authority in promulgating it, and remarked that the rule represents the "kind of regulatory overreach that President Trump was elected to stop."
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Subsequently, the Department of Labor issued a succinct statement: “The Department of Labor will now consider its legal options to delay the applicability of the date as we comply with the President’s memorandum.” This tells us two things:
- pending further action, the applicability date remains April 10, 2017; and
- any official delay will need to come by way of the Department of Labor.
“We continue to believe that a fiduciary standard is important for the retirement system, and the American workforce it supports," said Brian Graff, CEO of the American Retirement Association and NAPA Executive Director. "We will be working with the Trump administration toward a uniform standard that is both effective and practical for investors and those who help them achieve a secure retirement.”
The President signed a separate executive order on the same day ordering a review of Dodd-Frank and possible laying the groundwork for the Trump administration to redirect or influence the mission of the Consumer Financial Protection Bureau.
The Dodd-Frank executive order directs the Treasury Secretary to meet with all the top regulators, organized as the Financial Stability Oversight Council, and tell the President “within a relatively short period of time” what needs to be done to the law. The order will include a statement on “core principles” to guide the Treasury Secretary on what the administration wants to achieve and how it views financial regulations, according to the report.