Labor Secretary Tom Perez reassured House Democrats in person Wednesday about his agency’s soon-to-be-released sweeping rule meant to eliminate conflicts of interest in investment advice.
Perez joined a House Democratic Caucus meeting at the Capitol and attempted to allay the fears of some Democrats that the rule he is working on would limit savers’ ability to get professional advice on their retirement investments.
The rule, proposed last spring, would broaden the legal requirements for advisers to act in their clients’ best interests. Currently, many brokers, insurers and other investment professionals who manage tax-privileged retirement plans are not held to that fiduciary standard. The Obama White House estimates that savers lose $17 billion annually because advisers get them to buy inappropriate high-fee products for which the advisers receive kickbacks.
While Obama and liberal Democrats worried about savers getting ripped off strongly back the rule, many other Democrats have had doubts, with some signing on to Republican legislation to stop the rule and many more signing letters asking Perez to make changes.
Perez didn’t talk about specific provisions that might be included in the final rule, Democrats said Wednesday, but addressed some of the most serious concerns held by caucus members.
“I think there was a healthy discussion this morning,” said Rep. Joe Crowley, D-N.Y., the vice chairman of the caucus who has raised concerns about the rule.
“People are resigned to the fact that we have to wait for the rule to come out, and see what happens, what impact that will have,” Crowley said, suggesting that Democrats likely would not vote along party lines on legislation related to the rule, but rather in the interests of their constituents.
House Republicans have advanced bills that effectively would block the Labor Department’s rule-making and institute a different standard for advisers. Those measures have yet to reach the House floor, although this week House Speaker Paul Ryan said his party was “determined to do everything possible … to stop this harmful rule.”
GOP lawmakers have warned that the rule would make it impossible for advisers to serve small businesses and lower-income individuals and stay in business.
Some Democrats share that concern. Rep. Xavier Becerra, D-Calif., the caucus chairman, said Wednesday that “certainly that’s one of the concerns” that Perez has tried to reassure Democrats would be addressed in the final rule.
Becerra added that Democrats want to move in the same direction as the administration on the issue and that Perez found a lot of agreement “generally.”
Rep. Carolyn Maloney, D-N.Y., was more upbeat. “All the concerns I raised to him were all addressed,” she said.
The rule is expected in a matter of weeks, although Democrats did not say that Perez gave them a specific timeline. Perez’s office did not respond to a request for what he was going to talk to Democrats about.
