Finally, there’s voice of reason entering the policy harangue over the Department of Labor’s Fiduciary Rule … even if it’s coming through an unusual outlet. In a May 23 Wall Street Journal opinion piece, new Labor Secretary Acosta announced that DOL won’t further delay the implementation of DOL’s Fiduciary Rule past June 9.
To recap the bidding:
Tired of foot-dragging by the SEC and Wall Street on adopting an industry-wide fiduciary standard (notwithstanding everyone’s agreement in principle), the Obama administration spent over 6 years forging ahead through the Department of Labor.
The Fiduciary Rule became a labyrinthine Rube-Goldberg contraption of a standard, applicable only to tax-advantaged retirement funds, prohibiting all transactions with even the slightest compensation conflicts of interest, and then building precarious air-castles of un-safe harbors, exceptions and exemptions. DOL doesn’t have any real direct enforcement actions, but transactions caught in the web are subject to excise taxes (see IRS) and the whole thing is devised as a “gotcha” boon to the class-action plaintiffs’ bar.
Then newly-elected President Trump signed a February 3 Presidential Memorandum accompanied by a lot of fanfare (see Administration) and hysteria (see “Resistance”) about killing or delaying the over-reaching Rule – or protections for the retirement savings of the world, depending on your point of view. Never mind that the Memorandum merely ordered DOL to study the Rule.
DOL complied with a March Rulemaking that proposed to delay the Rule’s scheduled April 10 implementation another 60 days to allow DOL to do its homework (the June 9 deadline).
Within weeks, it looked like the interim-study-delay Rule might not make the original April 10 deadline, so DOL issued its Field Assistance Bulletin (“don’t worry, no enforcement”) to plug any gaps created by the hinky rule-making. In the end, though, the interim Rule was adopted and the April 10 effective date was delayed until June 9.
So here we are up against the new deadline. But look at this! In a calm voice vanishingly rare in Washington these days, Secretary Acosta’s column explained that Labor won’t delay the Rule any further because
(a) It has “found no principled legal basis to change the June 9 date while we seek public input”
(b) “Deregulators must follow the law, so regulators will too.”
As a practical matter, that likely means that the Fiduciary Rule is more likely to be substantially revised, rather than “repealed and replaced” (to steal the mantra from another policy arena). But in the meantime, you have to applaud the Secretary’s candor, calm, and devotion to principle.
Maybe Ringling Brothers isn’t the only circus starting to fold its tent. We can hope.
See A. Acosta, Deregulators Must Follow the Law, so Regulators Will Too¸ Wall St. J. at A19 (May 23, 2017).