Trump Wants to Do to the Fiduciary Rule What He’s Doing to the Climate

Donald Trump and the Department of Labor are delaying — and possibly killing — the fiduciary rule, which would have required investment managers to put their clients’ interests first instead of directing them to higher-fee options that benefit the money managers themselves. The White House’s Council of Economic Advisors found that the absence of this rule imposed as much as $17 billion in additional costs to retirees led to the Obama administration’s adoption of the rule over the massive efforts by the financial firms, including political contributions and lobbying. Money writes:

The Labor Department moved to delay the rule for two months, at the direct behest of President Donald Trump. President Trump signed a memorandum earlier this year in which he publicly came out against the rule and directed the Labor Department to review the impact of the regulation.

This setback comes at a time when the rule has a lot of support. Since the Labor Department proposed the delay a month ago and asked the public for comments, more than 178,000 letters poured into the Labor Department in support of the regulation, compared to just 15,000 letters in opposition. It required all financial advisors—including brokers with major firms like Merrill Lynch, Morgan Stanley and Wells Fargo—to act as fiduciaries, or in other words, in their clients’ best interest when advising people on their retirement savings.

While retirement plan beneficiaries say that they want their advisors to be fiduciaries and refrain from self-dealing, they do not want to pay for it, that is probably because they do not realize they are currently paying $17 billion for being sold products without full information about the fees. Whatever the fiduciary rule costs would be, they would be far less — and they would be disclosed.

Proponents of the rule have promised to challenge the delay in court. Stay tuned.

Fiduciary Rule Announced, Challenges Expected

The Department of Labor has published its long-awaited fiduciary rule

Labor Secretary Thomas Perez said,

With the finalization of this rule, we are putting in place a fundamental principle of consumer protection into the American retirement landscape: A consumer’s best interest must now come before an adviser’s financial interest. This is a huge win for the middle class…Today’s rule ensures that putting clients first is no longer a marketing slogan. It’s the law.

Ted Knutson writes:

Final may not be final for the Labor Department’s fiduciary rule for pension plan advisors both proponents and opponents of the best interest standard are warning.

While praising the standard for promising to save workers billions, Labor Secretary Tom Perez and Consumer Financial Protection Bureau founder Senator Elizabeth Warren are cautioning the rule could still face withering assaults in the courts and Congress by Wall Street financial firms and their Republican promoters in the House and the Senate.

Wall Street: Democrats Work To Block New Regulations After Flood Of Campaign Cash

The Obama administration’s efforts to rein in Wall Street face opposition from members of the president’s own party. In June, the Democratic Senatorial Campaign Committee attacked a Republican senator for having “supported repealing Wall Street Reform.” But the DSCC’s chairman, Sen. Jon Tester of Montana, is one of dozens of Democrats in Congress seeking to block implementation of key reforms in the party’s 2010 law to increase the financial industry’s accountability.

The discrepancy between Democrats’ rhetoric and their actions could be crucial as Congress moves to close out the year with a flurry of bills designed to undermine regulation of the financial sector. Lawmakers may use unrelated, must-pass spending bills as vehicles to deliver legislative victories for Wall Street — while the financial industry sends cash to their campaign committees.

One package of deregulatory riders would allow more banks to receive exemptions from new mortgage rules. Another would reduce the number of banks subject to added oversight from the Federal Reserve. Lawmakers may also vote on a bill to reduce prosecution of white-collar crime.

via Wall Street: Democrats Work To Block New Regulations After Flood Of Campaign Cash.