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By Sean Forbes
Feb. 24 — The Department of Labor failed to heed the concerns of other federal agencies and White House regulatory experts over its proposed fiduciary rule, a Senate Committee chairman said in a new report.
Officials and staff members with the Department of Treasury, the White House's Office of Management and Budget and the Securities and Exchange Commission expressed “numerous concerns” to the DOL while it was developing the rule, concerns that DOL officials disregarded, Sen. Ron Johnson (R-Wis.) said in the report, released Feb. 24.
Johnson, chairman of the Homeland Security & Governmental Affairs Committee, said that despite public assurances by DOL officials that the department had coordinated with the SEC in developing the rule, e-mails between staffers at the two agencies showed discord.
One DOL staffer wrote to his SEC counterpart, “ ‘Well, I hate to break it to you, but you're wrong,' and ‘We have now gone far beyond the point where your input was helpful to me,' ” according to the report. The SEC staffer responded: “ ‘I am now also utterly confused as to what the purpose of the proposed DOL rule is.' ”
Johnson's report is based on an inquiry his committee launched on Feb. 5, 2015, in which he sought communications between the SEC and the DOL regarding the proposed rule .
Among several criticisms, Johnson said that he was concerned about the speed at which the DOL was considering the regulatory and financial impact of the rule.
“The Administration was predetermined to regulate the industry and sought evidence to justify its preferred action,” Johnson said in the report.
The DOL also prioritized finishing the rule as quickly as possible “at the expense of thoughtful deliberation,” Johnson said.
The OMB received the final rule on Jan. 28, and although it has up to 90 days to review regulations, it's expected to release it sooner rather than later.
Johnson issued the report a day after the one-year anniversary of when President Barack Obama greenlighted the DOL to send the proposed version of the rule (RIN 1210-AB32), also known as the conflict-of-interest rule, to the OMB .
The senator also leveled criticism at the administration: “In the course of conducting oversight on the Labor Department's rulemaking, Chairman Johnson experienced tremendous opposition and noncooperation from the Administration,” the report said.
The report appeared in the midst of a flurry of recent developments—during America Saves Week—that may forecast that the final rule is ready to make its debut. Also on Feb. 24, Labor Secretary Thomas E. Perez met on Capitol Hill with members of the Democratic caucus about the project and indicated the final rule would be released soon.
House Speaker Paul D. Ryan (R-Wis.) kicked off the week of Feb. 22 with a blog post in which he fired up the rhetoric, saying that the rule “could hurt millions of middle-class savers.”
And the DOL tweeted twice to Twitter on Feb. 23-24 links to YouTube videos about conflicts of interest in retirement savings advice. In one tweet, the DOL said, “RT if you agree: Your money should be invested in your best interest,” and gave one of the video links. In the second tweet, the DOL said, “Hidden fees can reduce your savings,” and included the link to the other video.
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A copy of the report is at http://src.bna.com/cQs.
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