The Department of Labor retirement advice rules got axed by a Veto from Obama. DC courts set a date to hear the case against the regulation on the 25th of August this year.
President Barack Obama Vetoed a resolution approved by the house in April and passed the senate in May. The DOL fiduciary rule was under contention from either side, with parties both for and against it in almost equal number. In a statement released from the white house, it was said that the rule is important in protecting the hard earned savings of retired and retiring Americans.
The rules that were in place before this update was not in the best interest of the American public and that advisers did not always act in the best interests of their clients and that the rules were, for the most part, outdated. A number of firms have incentivized bringing people’s money into products that are expensive and do not necessarily have high returns. In all, the statement said, this costs the American families, up to $17 Billion a year. The above statement was provided as the reason for the Veto that the President laid out.
At the same time, the ACLI (American Council of Life Insurers) filed another lawsuit to place a legal injunction on the DOL fiduciary regulation. It follows the two already filed earlier this month. It was notably reluctant, according to sources.
The backers of the HR88, a statement prepared against the DOL fiduciary, the argument is that it will hurt low and middle income families, adversely affecting their savings and retirement money. Republican spokesperson Phil Roe lashed out at the President saying that while the President may be willing to risk the consequences of creating hurdles for those seeking retirement plans as well as those offering them, but the Republican Party is not.
It is interesting to note that both the House and the Senate fell well short of the required ‘Supermajority’ that is needed to override a Presidential Veto.
The only hope for those opposed to the Veto are the remaining lawsuits filed by various bodies and organizations. The long list includes eight industry and trade groups including the US Chamber of commerce. The lawsuits, however, are highly risky in more ways than one. First off, it will damage the brand that the retirement services industry has built up over time as being trustworthy.