The Obama Department of Labor’s fiduciary rule will devastate middle class investors by blocking access to investment choices and guidance for their 401(k)s and IRAs, explains a new report from the Competitive Enterprise Institute.
“The pending Obama administration regulations could cost middle class savers $80 billion in lost savings, imposing big regulatory barriers for small investment portfolios” said John Berlau, report author and CEI senior fellow. “Congress should act now to block implementation of the Department of Labor’s harmful fiduciary rule, which has been dubbed ‘Obamacare for Your IRA.’”
With the fiduciary rule, the Labor Department would bypass the Securities and Exchange Commission to reshape the investment industry – something Congress never envisioned or intended. The fiduciary rule broadly redefines a vast swath of financial professionals as “fiduciaries” and mandates that they act in what Labor Department bureaucrats determine as the “best interest” of investors. The CEI report makes the case that the regulation goes so far in its reach that even radio and TV financial talk show hosts could be ensnared in the new definition of a “fiduciary.”
At the core of the Labor Department’s unprecedented move is the presumption that American savers are not smart enough to make good investment decisions for their retirement, Berlau explains. In the proposed rule, issued last April, DOL proclaimed that people cannot “prudently manage retirement assets on their own” and that they “generally cannot distinguish good advice, or even good investment results, from bad.”
The CEI report urges Congress to block the DOL rule by defunding it, voting it down, or rewriting the law to make it clear the Department of Labor has no authority to impose such restrictions. Under the Congressional Review Act, Congress has 60 legislative days after a final rule is released to vote down the rule with a resolution of disapproval. Even if the president vetoes the resolution, the vote would put both the president and Congress on the record as supporting or opposing it.
Currently, the DOL fiduciary rule is pending review at the White House Office of Management and Budget, after which it will be published as a final rule, perhaps as soon as this month.