Smart Move for White House to Push Back on Fiduciary Rule, Dodd-Frank
President Trump’s forthcoming executive actions—expected to halt the Department of Labor’s fiduciary rule and call for review of Dodd-Frank regulations—will greatly benefit middle-class investors, entrepreneurs, and consumers.
The fiduciary rule is, by the government’s own estimates, the most expensive regulation promulgated by the Obama administration last year. It threatens the loss of access to investment advice and choices for millions of middle-class savers, as well the livelihoods of thousands of Main Street brokers and insurance agents. The Department of Labor also promulgated this rule by stretching the bounds of the 42-year-old Employee Retirement Income Security Act in a way Congress never intended, and the agency is now subject to lawsuits charging that the rule is “arbitrary and capricious.”
The fiduciary rule has attracted bipartisan criticism as three Democratic Senators voted with Republicans last year in supporting a resolution under the Congressional Review Act to overturn the rule. Moreover, 96 House Democrats expressed concern in a 2015 letter to the Department of Labor that the rule would limit access to financial advice for the poor and minorities. Given these bipartisan concerns, it is entirely sensible for President Trump to ask the Department to pause and review the rule, as he is expected to do.
The Dodd-Frank so-called financial reform law has been a huge burden on community banks, credit unions, and consumers. Directing financial regulatory agencies to ease the burden of implementation within the bounds of the law is a sensible action. Congress, however, still must do its duty and repeal the most burdensome provisions of this law.
For more congressional reform ideas, see the banking and finance chapter of Free to Prosper: A Pro-Growth Agenda for the 115th Congress. For more on actions the White House can take, see my recent Web Memo, First Steps for the Trump Administration: Restore Financial Freedom.