WASHINGTON – Sen. Ron Johnson (R-Wis.), chairman of the Senate Homeland Security and Governmental Affairs Committee, said this after the Labor Department released its final fiduciary rule on Wednesday:
“I am disappointed that the Labor Department issued its fiduciary rule, despite widespread concern about the rule’s complexity and the harm it may do to low- and middle-income investors,” said Johnson. “I am also disappointed that the Office of Management and Budget approved the rule even though the Labor Department failed to incorporate recommendations from non-partisan experts and did not comply with regulatory analysis requirements. The rule’s complexity presents significant challenges, especially for small business investment advisers. Americans saving their hard-earned money shouldn’t be forced to deal with additional hurdles and costs imposed by bureaucrats in Washington.”
In February 2016, Johnson released a report on the Labor Department’s fiduciary rule, “The Labor Department’s Fiduciary Rule: How a Flawed Process Could Hurt Retirement Savers.” The report revealed that the Labor Department disregarded concerns and recommendations from career, nonpartisan, professional staff at the Securities and Exchange Commission, regulatory experts at the Office of Information and Regulatory Affairs (OIRA) within the Office of Management and Budget (OMB), and Treasury Department officials. The report shows that the Labor Department pushed to issue the regulation at the expense of thoughtful deliberation.
The report also found that the Labor Department did not comply with the requirements of executive orders by failing to conduct a quantitative analysis of alternatives to the rule. Rather, the Labor Department sought to “build the case for why the rule is necessary” by identifying data that could be woven together “to demonstrate that there is a market failure and to monetize the potential benefits of fixing it.” While OIRA was reviewing the rule, Johnson sent a letter urging the OMB and OIRA to uphold their regulatory review obligations and to enforce the stringent standards for the regulatory process as set by executive order. Johnson urged OIRA to return the rule to the Labor Department if the Labor Department had not remedied the deficiencies that existed in the proposed rule that was released in April 2015.
- The report can be found here, and appendices to the report can be found here: Appendix A, Appendix B, Appendix C.
- The letter to the OMB can be found here.
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