- Effort to prevent fiduciary duty regulation now goes to Senate
- Obama administration says president would veto legislation
Republican lawmakers aren’t giving up yet in their fight to kill stricter rules for brokers that have been championed by President Barack Obama.
In what might prove a symbolic vote, the U.S. House passed legislation 234-183 Thursday that would block a Labor Department rule requiring financial advisers to put their clients’ interests ahead of their when handling retirement accounts. To become law, the House measure must be approved by the Senate and signed by Obama, whose administration announced Wednesday that he would veto the bill if it reaches his desk.
Labor released what’s known as the fiduciary duty rule earlier this month, with administration officials saying it will help protect millions of savers from conflicted investment advice that costs the public $17 billion annually. For financial firms that have fought the new regulation for six years, stopping it from taking effect probably requires help from Congress or winning a legal battle in the courts.
The White House has said the tougher standard will eliminate hidden incentives that cause brokers to push investment products with high fees and commissions. The industry argues that the rule will hurt less-affluent investors, because firms facing steeper compliance costs will drop smaller accounts.
Previous lawmaker efforts to kill the Labor regulation have failed.
Congress’ latest attempt relies on a rarely-used law called the Congressional Review Act that allows what’s considered to be "major" new rules to be overturned. To date, the Congressional Review legislation has been successfully used just once to stop a regulation.