As expected (and promised), President Obama has vetoed Congress’ resolution that would have nullified the Labor Department’s fiduciary regulation.
“The outdated regulations in place before this rulemaking did not ensure that financial advisers act in their clients' best interests when giving retirement investment advice,” the president said in his veto message, going on to note, “Instead, some firms have incentivized advisers to steer clients into products that have higher fees and lower returns — costing America’s families an estimated $17 billion a year … Because this resolution seeks to block the progress represented by this rule and deny retirement savers investment advice in their best interest, I cannot support it. I am therefore vetoing this resolution.”
The Senate voted 56-41 on May 24 to formally disapprove of the rule under the Congressional Review Act (CRA), with three Democrats — Heidi Heitkamp (N.D,), Jon Tester (Mont.) and Joe Donnelly (Ind.) — crossing the aisle to help pass the disapproval resolution (H.J. Res. 88) by a 56-41 margin. That vote came on the heels of a successful, albeit party-line, vote in the House of Representatives in April, at which time the president made clear he intended to veto the resolution. With neither the House nor the Senate having enough votes to override that veto, the next act to stop the regulation will rely on litigation.
