WASHINGTON – Ignoring a White House veto threat, the House voted on Tuesday for a bill that would delay rules for brokers who provide financial advice to retirees.
The Republican-led House voted 254-166 for the measure that stands little chance in the Democratic-controlled Senate but reflects GOP efforts to stop or slow Washington regulations that the party argues stifle the growth of business.
The Labor Department is expected to propose rules putting brokers under the same fiduciary requirements as investment advisers. The administration has argued that the rules would ensure that brokers avoid conflicts of interest and operate in the best interest of clients seeking investment advice for their retirement years.
The House measure backed by Wall Street and the U.S. Chamber of Commerce would bar the department from issuing new fiduciary rules until 60 days after the Securities and Exchange Commission finalizes its rule. It also requires the SEC to produce a report on the impact of the new rules.
The legislation stems from GOP attempts to slow implementation of the 2010 Dodd-Frank law, the sweeping financial regulation measure designed to prevent another economic crisis like the 2008 near-collapse.
Proponents of the House measure, which passed the Financial Services Committee in June on a bipartisan vote, argued that the department and SEC should act in tandem.
Rep. Jeb Hensarling, R-Texas, chairman of the panel, said the bill would stop the SEC from regulating “first and asking questions later.”
“Millions turn to professionals for advice,” Hensarling said during House debate. “Regulation makes that advice unavailable or unaffordable.”
Opponents of the House bill said it impedes efforts by the department and SEC to protect the average investor as they try to modernize 35-year-old rules for a fast-changing marketplace with online brokers.
“This is a backdoor-attempt to undermine investor protection in Dodd-Frank,” said Rep. Maxine Waters of California, the top Democrat on the Financial Services panel.
In issuing its veto threat, the White House said the House bill would “hinder efforts to protect consumers from conflicts of interest among brokers, dealers, financial advisers and others whose incentives may be misaligned with investors, potentially leading to deceptive and abusive practices.”
Rep. George Miller, D-Calif., said brokers often know of conflicts of interests but individuals handing over their hard-earned money aren’t always aware that a broker might be getting a significant percentage from a specific fund. Miller said the new rules would protect families from being ripped off.
But Rep. Patrick McHenry, R-N.C., said the only rip-off was two government agencies writing rules and not talking to each other. He said the House effort would protect investors.
Bruce Josten, executive vice-president of the U.S. Chamber of Commerce, said in a letter to lawmakers this week that the organization may include the vote in its congressional scorecard.
“The Chamber believes that ensuring retail investors have continued access to their choice of financial products and services that best meet their needs will help meet investment objectives, secure retirement security, and bolster long-term economic growth,” Josten said.
But Better Markets, an independent, non-profit organization, urged a vote against, saying “the only things this bill will protect are the bonuses of brokers and financial advisers, which come at the expense of their customers.