Sen. Ron Johnson (R-Wis.), chairman of the Senate Homeland Security and Governmental Affairs Committee, asked three top regulators in the outgoing Obama administration to cease implementing new regulations. Singled out was Department of Labor’s 401k fiduciary rule, which Johnson asked Secretary Tom Perez to delay, calling it especially burdensome.
The fiduciary rule, he argued, would “pile significant costs onto American businesses and families and could have severe unintended consequences. These rules are likely to be undone by the incoming administration and the 115th Congress.”
“On November 8, the American people voiced their disapproval of a federal government run by regulation and executive fiat,” Johnson wrote. “The incoming administration and the 115th Congress will likely re-examine and unwind burdensome regulations imposed by the Obama administration.”
Johnson is the third high-profile Republican to officially call for the rule’s discontinuation. House members Rep. Jeb Hensarling joined Rep. Ann Wagner, R., Mo. Called for the same earlier in November.
The calls are in line with a then candidate Trump’s campaign promise to roll back regulations he felt were unnecessarily complicated and stifling of business growth.
Kim O’Brien, former president of advocacy organization National Association for Fixed Annuities (NAFA)—itself embroiled in a lawsuit over the fiduciary rule’s implementation—and current vice chairman and CEO of Americans for Annuity Protection, said republicans essentially has three options.
The first is to freeze the rule upon assuming office. Although currently in the Federal Register, it won’t take effect until April. The law allows a newly-elected president to stop such rules as long as it doesn’t involve Congress or affect public safety.
“The DOL’s action does neither, so [Trump] could do it,” she added.
The second is to allow the rule to be implemented and revise it afterwards. The third possibility is to allow the rule to be implemented and then fully repeal it.
“This is not a political statement, but I would be wary of promises in the first year of a presidency,” she warns when speaking of the possibility of the first option. “They become overwhelmed with other priorities, and this might not rate very highly.”
Regardless, firms should continue with their preparation for an eventual implementation of a fiduciary standard.
“It would be could to freeze it in place and repeal the current rule, and then develop on that is workable and manageable, which this one is not.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
