Yesterday, while the Senate was passing a new surveillance bill, the House passed the Retail Investor Protection Act.
Does this protect investors? Of course not.
What does it do, then?
The bill would prohibit the Department of Labor from issuing a final rule regarding "fiduciary duty" in retirement investment advice until at least sixty days after the SEC issues a rule for the standards of brokers. This is intended to slow the rulemaking process down so that it goes into the next presidency. And since the bill doesn't require the SEC to issue such a rule, it could effectively block the DOL from ever acting.
Here's the DOL explaining the purpose of the rule back in February:
Middle class economics means that Americans should be able to retire with dignity after a lifetime of hard work. But loopholes in the retirement advice rules have allowed some brokers and other advisers to recommend products that put their own profits ahead of their clients' best interest, hurting millions of America's workers and their families.
A system where firms can benefit from backdoor payments and hidden fees often buried in fine print if they talk responsible Americans into buying bad retirement investments—with high costs and low returns—instead of recommending quality investments isn't fair. A White House Council of Economic Advisers analysis found that these conflicts of interest result in annual losses of about 1 percentage point for affected investors—or about $17 billion per year in total. To demonstrate how small differences can add up: A 1 percentage point lower return could reduce your savings by more than a quarter over 35 years. In other words, instead of a $10,000 retirement investment growing to more than $38,000 over that period after adjusting for inflation, it would be just over $27,500.
In February, the President directed the Department of Labor to move forward with a proposed rulemaking to require retirement advisers to abide by a "fiduciary" standard—putting their clients' best interest before their own profits. And today, the Department of Labor is taking the next step toward making that a reality, by issuing a Notice of Proposed Rulemaking (NPRM) to require that best interest standard across a broader range of retirement advice to protect more investors.
The House GOP's bill passed
245 to 186.
Three Democrats joined the GOP here:
Brad Ashford (NE-02)
Henry Cuellar (TX-08)
David Scott (GA-13)
Two Republicans joined Democrats in voting against it: Walter Jones (NC-03) and Kenny Marchant (TX-24).
The House voted on one amendment, offered by Stephen Lynch (MA-08). This amendment would replace the bill's existing requirement that the Department of Labor (DOL) stop its rulemaking pending a final Securities and Exchange Commission (SEC) rule with a requirement that the SEC revise its own rules relating to the standards of conduct for brokers and dealers no later than 60 days after the DOL finalizes its rule and require the SEC to coordinate with the DOL in issuing its rule.
It failed 184 to 246.
Three Democrats voted with the GOP against it:
Brad Ashford (NE-02)
David Scott (GA-13)
Kyrsten Sinema (AZ-09)
And, as before, Walter Jones (NC-03) joined the Democrats, voting for it.