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“MILITARY CONSTRUCTION AND VETERANS AFFAIRS AND RELATED AGENCIES APPROPRIATIONS ACT, 2016” mentioning the U.S. Dept of Labor was published in the in the Extensions of Remarks section section on pages E1823-E1824 on Dec. 18, 2015.
The publication is reproduced in full below:
MILITARY CONSTRUCTION AND VETERANS AFFAIRS AND RELATED AGENCIES
APPROPRIATIONS ACT, 2016
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speech of
HON. THOMAS MacARTHUR
of new jersey
in the house of representatives
Thursday, December 17, 2015
Mr. MacARTHUR. Mr. Speaker, I was disappointed to see there was no language in the Omnibus to delay the implementation of the Department of Labor's fiduciary proposal and allow the bipartisan proposal in the House to codify a workable fiduciary that would truly protect savers.
The Department of Labor's (DOL) proposed fiduciary standard is a well-intentioned but poorly conceived proposal. I've expressed concern with a number of issues in the proposal in the past but I'd like to focus on the Department of Labor's legal authority over IRAs in my comments today.
Congress explicitly designated employer-sponsored plans to the fiduciary standard under ERISA. Congress also explicitly designated IRAs to be governed by the Internal Revenue Code's prohibited transaction rules.
DOL is simply not legally permitted to exert jurisdiction over IRA rollovers and to apply a fiduciary standard to IRAs without Congressional approval. Congress has amended ERISA and the tax code multiple times and has chosen repeatedly not to make this change. It is not legally permissible for an unelected bureaucrat from DOL to make that decision for the Congress, and the people we've been elected to represent back home.
There are already a number of federal agencies that do have the authority to regulate financial transactions over individual IRAs, namely the SEC and FINRA. SEC and FINRA have a demonstrated record of education and enforcement to minimize any conflicts and punish advisors who violate those standards. When advisors act against their clients' interests, they should and will be punished. It is unreasonable to place a prohibitive regime across an entire industry of professionals working in their client's best interest, rather than punish those who violate it.
Former head of the Employee Benefits Security Administration
(``EBSA'') Brad Campbell, the Department agency promulgating this regulation, testified at a recent hearing, ``This is a significant departure from the Department's traditional view of its authority regarding the application of the prohibited transaction rules to IRAs, in that it is attempting to leverage this authority to establish a fiduciary standard of care the statute does not provide.
``Testimony identifying a large number of significant technical problems with the Proposal, are a direct result of the Department's unfamiliarity with the IRA marketplace and with the role of other regulators in governing financial advice provided to IRAs. The Department is trying to force a square peg into a round hole by asserting that the ERISA fiduciary standards can and should apply to IRAs in addition to the existing regulatory regimes already in place.''
I am a strong supporter of a best interest standard to protect our constituents when they receive advice on IRAs, but this proposal is based on doubtful legal authority and is unworkable in practice. It will lead to our nation's most vulnerable savers receiving no financial advice at all, at a time when they need it most.
Again, I appreciate the DOL's intentions in promulgating these regulations but I believe they are out of their area of expertise and it is reflected in the quality of the proposal. I hope the DOL plans to work with Congress as we progress on our bipartisan best interest standard that will be codified into law, rather than continue to attempt to overstretch the authority given to them by the Congress. Congress will continue to protect our constituents' best interests and assert our authority over the issue.
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