Obama vetoes resolution to block DoL fiduciary rule
The push in Congress to derail the Department of Labor's controversial fiduciary rule will have to wait for another day.
President Obama on Wednesday vetoed a resolution that would have overturned the fiduciary regulation, a rule that he says "is critical to protecting Americans' hard-earned savings and preserving their retirement security."
The DoL's rule, finalized earlier this year, requires advisers working with retirement plans and clients to act as fiduciaries, committing in a binding contract to offer advice in the best interests of their clients.
"It is essential that these critical protections go into effect," Obama writes in his veto message. "Because this resolution seeks to block the progress represented by this rule and deny retirement savers investment advice in their best interest, I cannot support it. I am therefore vetoing this resolution."
Read more: Fiduciary rule: Bulletproof to first attack?
Obama's veto of H.J. Res. 88, which was expected, sends the matter back to Congress, where the issue could stall until after the November election. In the Senate, opponents of the measure don't have enough votes to overcome the veto, and some members are already looking ahead to a renewed effort to push back the regulation in the next Congress.
Rep. Phil Roe (R-Tenn.), one of the leading critics of the fiduciary rule in the House and the author of the resolution of disapproval, addressed the issue recently at a conference in Washington hosted by the Investment Company Institute. Anticipating the presidential veto, Roe suggested that a Donald Trump presidency could brighten the prospects for rolling back the rule, which critics say will leave millions of middle-income investors without access to retirement advice.
"Obviously this election that's coming up changes everything," Roe said. "If Trump wins I think there's a great chance that he can overturn it."
On the other hand, "if Hillary Clinton wins, I don't think you'll see [it] change much," Roe concluded.
Responding to Obama's veto, Roe says in a statement that the move "threatens the retirement security of millions of working families," warning that access to retirement advice will be restricted and fewer small businesses will be able to set up retirement plans for their employees.
"President Obama is apparently willing to accept these painful consequences, but Republicans are not," Roe says. "We'll continue to do everything in our power to protect access to affordable retirement advice for every American."
In the meantime, the DoL's fiduciary framework is under attack in the courts, with a consortium of trade groups and other opponents bringing a lawsuit in a federal court in Texas that seeks to vacate the rule on the grounds that the department exceeded its authority in drafting the regulation.