STL Business Journal OP-ED: Protecting Main Street from Washington
Protecting Main Street from Washington
By: Rep. Ann Wagner
Families in the St. Louis region and across the country are facing plenty of threats to their ability to save for the future. Household incomes are lower than they were when the previous recession ended in 2009, hours at work are being cut back for a variety of reasons, and unemployment remains stubbornly high. But it’s pending regulations from the federal government that pose one of the biggest threats to the balance sheet of American families.
Two federal agencies – the Department of Labor (DOL) and Securities and Exchange Commission (SEC) – are heading towards two separate and massive rulemakings that will likely hamper the ability of Americans to save and invest their hard-earned money. By trying to impose greater legal liabilities on Main Street financial professionals (“fiduciary” liabilities in Washington-speak), the SEC and DOL efforts could very well backfire and harm the very people they are trying to protect. The regulatory costs of doing business would increase for providers, and those costs would be passed on to families and individuals who would lose access to valuable services.
Particularly worrisome is the DOL’s project. When the DOL first proposed a rule in this area in 2010, it was roundly condemned by both conservative and liberal members of Congress. One study showed that costs to holders of Individual Retirement Accounts (IRA’s) could increase nearly three-fold, and Republicans and Democrats both agreed that low and moderate income Americans would be shut out of the financial advice market.
Furthermore, there is little indication that the DOL is coordinating its rulemaking with the SEC. This could cause their rules to conflict with one another, leading to great uncertainty for businesses and investors. Part of the regulatory failure leading up to the 2008 crisis was a lack of coordination between regulators. Unfortunately, it appears that neither the DOL nor the SEC have learned this important lesson.
Earlier this year, I introduced bipartisan legislation, The Retail Investor Protection Act, to address this important issue. The legislation would preserve and increase middle and lower income Americans' access to affordable investments by placing some important checks and balances on the rulemaking efforts by these two agencies.
This week, the House of Representatives passed the Retail Investor Protection Act in a strong bipartisan vote of 254-166, and it is now up to the Senate to move this legislation forward. I am very pleased that at a time of heightened partisanship in Washington, Republicans and Democrats were able to work across the aisle and pass an important bill for hardworking American families.