Victory is sweet, but very irritating to the losers, especially if they are Wall Street’s lawyers, lobbyists and allies. After losing every battle for the last couple of years, industry opponents of the Department of Labor’s rule requiring financial advisers to put retirement savers’ best interests first have lost yet another battle in their relentless war to kill the rule. Putting their own interests above their clients’ best interest allows them to pocket tens of billions of dollars a year and they aren’t giving that up without a fight.
The latest reason for their vitriol is the Trump Administration’s failure to rescind the rule with the stroke of the President’s pen on an Executive Order that could have been – and might well have been – drafted by Wall Street’s biggest banks. While a huge loss for the industry, it is another huge victory for America’s retirees and for fact-based decision making.
Unwilling to accept that they have no valid case on the merits for delaying or killing the best interest rule, the rule’s opponents have now resorted to baselessly attacking the professional career staff at the DOL. Why? Because DOL delayed the effective date of the rule just 60 days rather than as much as a year as they wanted (figuring that’d be plenty of time for the Trump administration to kill it). Having not received what they think they’re entitled to, they’re accusing the DOL staff of cleverly and covertly thwarting the new Administration. That is laughable and it’s time once again to set the record straight.
First and foremost, the President is not a king and he cannot with the stoke of a pen change the law or break the law no matter how much he or his Wall Street allies want him to. Similarly, the law applies to his nominees, appointees, staff, and everyone else, including the professional career staff. Public officials are sworn to uphold the Constitution and the laws of the United States, not a President’s wishes.
Second, it’s the facts and law that count and, having participated in more than 200 rulemakings and dozens of lawsuits since Dodd Frank was passed in 2010, we at Better Markets know the rulemaking requirements and process as well as if not better than anyone, including Wall Street’s lawyers and lobbyists. Just as the industry did during the Obama administration, the Trump Administration is going to have to follow the law to the letter or be overruled in court.
Third, the laws require all agencies writing new rules to engage in a fact-based, thorough, thoughtful, and public process, always guided by Congress’s judgments about what’s best for the American people. Here, the best interest first rule resulted from one of the most lengthy, data-driven, and open rulemakings in history. This included years of consultation with all stakeholders including prominently industry, a robust economic analysis detailing the costs and benefits of the rule, months of public comment, and an unprecedented week of public hearings.
Any attempt to delay, roll back, weaken or kill the rule must comply with these same requirements governing the rulemaking process. Given the substance of the best interest first rule, the rigorous process that led to it, and, above all, the enormous good it will do for tens of millions of hardworking Americans who have been victimized far too long by outrageous conflicts of interest among their financial advisers, the new Administration will have a hard time justifying any significant revisions, let alone an outright repeal.
Fourth, that’s the case we made to the DOL and OMB when the DOL proposed a rule to delay the effective date for the rule. We detailed the facts and the law that fully supported the best interest rule and demonstrated that any delay was unwarranted and would be harmful and costly. The DOL and OMB didn’t have to take our word for this. The record supporting the best interest first rule was as big as a mountain, which any delay would have to consider. We also put in the record three federal district court decisions from just the last six months, each of which resoundingly rejected every attack against the rule, finding that is was justified on the exhaustive record the DOL compiled and that its benefits will far outweigh its costs.
We then met with DOL and OMB staff to ensure that they took all of this into account and that they understood the very serious litigation risks they faced if they failed to follow the facts and the law. Having engaged with the industry for years at all the financial regulatory agencies, we well knew what the law required.
We weren’t alone. We worked with Save Our Retirement coalition partners and many others. In the end, there were 193,000 comment and petition letters filed in response to the delay proposal, and 178,000—nearly 90%–opposed any delay whatsoever. Importantly, this wasn’t just a handful of public interest advocates supporting the rule: it was every major investor and consumer protection organization in the country along with some industry participants, particularly new entrants.
The result of this massive effort was a huge victory: virtually every argument the industry made for putting their interests first and their clients’ interests second were rejected on the merits, based on the facts and the law. While they did get a 60-day delay, it wasn’t what they wanted and the basis made clear that there was ample support for the best interest rule as finalized and that no further delay could be justified.
Left with nothing else to argue, the industry and its allies, including those in the media, are now attacking the professional staff at the DOL. They should be ashamed – ashamed for opposing one of the most important and beneficial reforms in decades and for trying to scapegoat the public servants at DOL who are simply following the facts and the law.
