Washington, D.C., February 11, 2015 – Dennis Kelleher, President and CEO of Better Markets, sent the following letter to The Honorable Thomas E. Perez, Secretary of Labor, urging the Department to issue an updated rule designed to protect retirement savings:
The Honorable Thomas E. Perez
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
Re: The Department of Labor (DOL) Should Issue for Public Comment the Long-Delayed Rule to Protect Retirement Savings
Dear Secretary Perez:
As you know, there is a retirement crisis in this country. Simply put, not enough people are saving, and many of those who do save aren’t setting aside nearly enough to provide for a decent retirement. This is not only a potential human tragedy, with millions of Americans being unable to afford a dignified retirement after decades of hard work, but also a potential federal budget crisis, as the cost of caring for our seniors without adequate retirement savings skyrockets in the years to come.
As if that weren’t bad enough, the retirement crisis is being made worse by the 40 year old rule governing investment advice provided to people who are saving for retirement. That outdated rule is riddled with loopholes and often does not require advisers to act in their client’s best interest. Indeed, the current rule allows advisers to put their economic interests above the interests of their clients, who turn to them for help navigating a complex and bewildering financial marketplace.
In response to this retirement crisis, the DOL has been considering a proposed rule to close those loopholes, to require advisers to act solely in their client’s best interest, and to thereby increase the amount of savings American families have available for retirement.
As you also know, there is opposition to this proposed rule among some elected officials, lobbyists, lawyers, industry participants, and others. The media have repeatedly reported that representatives of these groups have met frequently with officials from the DOL, the National Economic Council, the White House Office of Public Engagement, and others in the White House and the Executive Branch. Unfortunately, none of these meetings have been public or provided for input from the public.
This lack of transparency is very troubling. To make matters worse, it has been widely reported that industry has used these private meetings to argue that the DOL should never release its proposed rule to the public, who would then never have an opportunity to comment on it. While industry input may be appropriate, it cannot be to the exclusion of the public on a matter of such importance to tens of millions of Americans. It is past time to level the playing field, to put the public on an equal footing with the industry, and to release the rule so everyone can comment on it.
This is the best way to dispel the rumors and speculation – innocent or malicious – about what is or is not in the proposed rule. And it is the only way to enable a transparent, public debate about the merits of the DOL’s actual proposed rule. It would also eliminate the basis for selective and ad hoc requests for information about the rule, such as the request that Chairman Ron Johnson submitted to you by letter dated February 5, 2015. As is typical of many things that have been said about the proposed rule, much of the letter appears to be based on speculation regarding the content and impact of the rule. For example, Senator Johnson restates critics’ entirely speculative concerns that the proposed rule might “adversely affect middle to low-income Americans’ access to investment advice.” While that would certainly concern us as well if it were true, it appears to be baseless: According to many public accounts, the proposed rule will better protect the savings of all Americans, especially those with low and middle incomes who can least afford to have their savings drained away by conflicts of interest.
In addition, we believe it is critically important that the economic analysis for this proposed rule be conducted properly, in accordance with applicable law, and taking all appropriate factors into account—including especially the public interest. For example, the economic analysis must consider the fact that middle to low-income Americans are too often losing substantial amounts of savings today as a result of a 40 year old rule that allows advisers to put their economic interests over the best interests of those struggling to save as much as possible for retirement.
To end the rampant speculation and rumors, we urge you to immediately transmit the proposed rule to the Office of Management and Budget so that it can be released for public comment as soon as possible. That is the only way to enable a transparent, open, and public debate on a level playing field where the actual contents of the proposed rule – and the basis for it – can be debated. The DOL owes it to the public to release its proposed rule without delay.
Thank you for your attention to this matter.
Dennis M. Kelleher
President & CEO
Sen. Ron Johnson, Chairman
Sen. Thomas R. Carper, Ranking Member
United States Senate Committee on Homeland Security and Government Affairs
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.