In the latest tactic to forestall the release of the Department of Labor's new fiduciary standard, two Republican lawmakers are asking the director of the Office of Management and Budget to guarantee the public will have a full 90 days to review the proposal once it's released.
Senator John Boozman, R-Arkansas, who is chairman of the Subcommittee on Financial Services and General Government, and Rep. Ander Crenshaw, R-Florida and chair of the same subcommittee in the House, are worried the OMB will rubberstamp the proposal without fully considering its opponents' arguments.
"Given the concerns raised with the initial rule proposal, the DOL should guarantee that the public will have at least 90 days to review, analyze, and comment on any proposed rule, proposed exemptions, regulatory impact, and cost-benefit analyses," they wrote.
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Generally, the OMB offers a 90-day comment period after any rule is released, but it is under no obligation to exhaust the full period. Nor is it required to close the public's response to a proposed rule after 90 days.
The average period of public comment for rules proposed by the DOL is 117 days, according to research cited by the Financial Services Institute, an industry group opposed to the rule.
Echoing the industry's concerns, the lawmakers wrote that a new DOL rule, which is expected to apply a stricter fiduciary standard of care throughout the broker-dealer industry would "significantly" harm low- and middle-income investors seeking financial advice for retirement.
They also think the DOL is exercising authority best left to the Securities and Exchange Commission, another point promoted by Wall Street.
Dodd-Frank assigned the responsibility for developing a uniform fiduciary standard of care to the SEC, the lawmakers argued in their letter.
What they don't say in the letter is that Dodd-Frank left the responsibility to do so at the SEC's discretion; the agency has the authority to create a new standard, but is not required to.
The SEC has been far less aggressive than the DOL in taking up the matter.
At the first Investor Advisory Committee meeting of the year in February, SEC Chair Mary Jo White said the agency will consider whether it should "subject broker-dealers to a fiduciary standard" this year, though her address suggested other issues held priority on the agenda.
In their letter to the OMB, the lawmakers expressed concern over the potential for inconsistent rules, should the SEC decide to act.
"For that reason, we believe the SEC should move first in any rulemaking in order to address issues of investor harm and confusion surrounding different standards of care," they said.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
