“Fiduciary Rule Goes Prime Time,” reads the headline of a recent cover story of the magazine Investment News. The story argues that after political comic John Oliver praised the Department of Labor’s “fiduciary rule” on his HBO show “Last Week Tonight,” suddenly “the people the regulation targets – investors – are getting into the conversation.”
“Targets” is an apt word for what the fiduciary rule actually does, since it shoots down the investment choices of middle-class savers in their 401(k)s and IRAs. The rule, which is now being challenged in five separate lawsuits, mandates that a vast swath of financial professionals only serve the “best interest” of IRA and 401(k) holders—with “best interest” defined by the government.
The story, written by knowledgeable reporter Mark Schoeff, does point out some interesting tidbits like a sharp increase in internet queries on the word “fiduciary” after the segment aired. But it overlooks the fact that ordinary investors have been “in the conversation” months before Oliver’s report, thanks to grass-roots action spurred by free-market groups including the Competitive Enterprise Institute, FreedomWorks, Americans for Prosperity, National Taxpayers Union, and Americans for Tax Reform.
As this blog reported last August:
CEI’s breakdown of the comments show massive opposition to the rules, particularly among the middle-class savers [the Department of Labor] and its supporters say they are trying to help. … 74 percent of individual commenters with no listed business interest opposed the rules. 22 percent supported, and 4 percent were neutral. Like Mr. Schwartz, many of the 354 commenters pointedly told the DOL to leave their retirement savings alone. “Stay out of my retirement investing,” and “please stay out of my 401(k)” are the typical sentiments of these concise comments. Some, like Linda Nein of Salem, Oregon, called out the gall of the government to accuse them of not being able to “prudently manage” their retirement accounts after the Obama administration blew $535 million on the Solyndra green energy boondoggle. These individual savers may have been encouraged to file comments by a column I wrote for FoxNews.com and an “action alert” from FreedomWorks, but they put their own sentiments and experiences into their comments.
Later, near the end of last year, more than 30 center-right groups signed a coalition letter urging Congress to defund the fiduciary rule in any spending bill. While this defunding unfortunately was not done, both houses of Congress did pass this spring a “resolution of disapproval” to block the rule under the Congressional Review Act. President Obama vetoed the resolution and Congress lacked the two-thirds majority needed to override it. Nevertheless, the rare use of the CRA against this rule should bolster the argument made in the pending lawsuits that the Labor Department defied Congress and the laws on the books in making this rule.
Middle-class savers continue to speak out against this assault on their investment choices. We can only hope that politicians, courts, media, and maybe even comics like John Oliver will start listening!
CEI research associate Daniel Crowley contributed to this post.