Congress will get its first shot this week at questioning President Joe Biden’s nominee for Labor Secretary, Boston Mayor Marty Walsh.
Walsh, 53, will appear this Thursday, Feb. 4, before the Senate Health, Education, Labor and Pensions Committee. A live video of the 10 a.m. (EST) hearing can be viewed here.
Walsh’s hearing could be a little bumpier than that of Treasury Secretary Janet Yellen, who was confirmed by the Senate on Jan. 25. Walsh is expected to face a number of questions on his organized labor background. He was a Laborers’ Union member and Building Trades official before being elected mayor.
Walsh, looking to succeed Eugene Scalia in the position, will also face a wide variety of questions about how he would manage the DOL, including what policies and programs he plans to prioritize during his tenure.
The Insured Retirement Institute is hoping the committee will include questions like the ones it submitted in a letter to the committee that specifically address the retirement security challenges facing America’s workers and retirees. Among them, whether Walsh would support:
- Generally requiring small businesses with 10 or more employees to offer a workplace retirement plan into which workers would be automatically enrolled with the right to opt-out.
- Allowing employers to provide matching contributions into an employee’s retirement account based on the amount of the employee’s student loan payments.
- An increase in the RMD age.
- Expanding the options now authorized to be used as qualified default investment alternatives (QDIAs) in retirement plans to include protected and guaranteed lifetime income options such as an annuity.
Fate of Fiduciary Rule
IRI also proposed questions regarding the controversial recent rulemaking by Scalia’s DOL—specifically the fiduciary rule and environmental, social and governance (ESG) rule.
If confirmed by the Senate, Walsh would have a role in reviewing the Labor Department’s recent rulemaking, as well as determining whether the DOL reopens other regulatory projects finalized recently by the Employee Benefits Security Administration.
The DOL’s fiduciary rule regulates “investment advice fiduciaries” under the Employee Retirement Income Security Act of 1974 (ERISA). The new fiduciary rule guidelines promulgated by the DOL in December 2020 appear to be in jeopardy under a Biden administration with Walsh as Labor Secretary.
The final version of its proposed revision to the fiduciary rule, called the Prohibited Transaction Exemption, affirms the reinstatement of the five-part test for determining when investment advice triggers a fiduciary duty under ERISA.
Since the Administrative Procedures Act and Congressional Review Act require the DOL to allow 60 days from publication before major rules becomes effective, the new fiduciary rule and its guidance for advice related to rollovers will not go into effect until February 16, 2021. Many observers think it is very likely that Walsh, if confirmed, will suspend its implementation.
ESG rule also in doubt
Under the new ESG rule, which became effective on Jan. 12, 2021, plan sponsors’ investment selection process is much more complicated and burdensome than is necessary to effectively protect plan participants from financial risk, IRI said in its letter to the committee, and noted that President Biden has already called on the Labor Department to review this rule. IRI wants to know if Walsh would support restoring the rules governing the selection of plan investment options to their pre-2020 form.
The newly imposed final rule requires plan sponsors and other fiduciaries selecting ESG funds “to separate the legitimate use of risk-return factors from inappropriate investments that sacrifice investment return, increase costs, or assume additional investment risk to promote non-pecuniary benefits or objectives.” Lacking a uniform definition of the term, the rule doesn’t contain specific references to ESG. Instead, it refers to “pecuniary” and “non-pecuniary” factors.
Confirmation process
The confirmation process includes several rounds of investigation and review, which started with Walsh’s submission of a personal financial disclosure report and a background check in advance of Thursday’s committee hearing. The hearing allows for a close examination of the nominee and his or her views on public policy, with both supporters and opponents of the nominee allowed to testify.
Following the committee hearing, the committee will vote on whether the nominee is reported to the Senate favorably, unfavorably, or without recommendation. The nomination then goes to the Senate floor for consideration. Following debate, the Senate conducts a simple majority vote on whether to confirm, reject, or take no action on the nomination.
SEE ALSO:
- Biden Picks Boston Mayor Walsh for Labor Secretary
- What Labor Nominee Walsh Means for the Fiduciary Rule’s Future
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
