Levitt: Industry Wants the DOL Proposal Studied to Death
Lawmakers who insist on studying the Department of Labor’s proposal to impose the fiduciary standard on retirement-account advisors are simply trying to kill it, writes former SEC chairman Arthur Levitt Jr. in an opinion piece for Bloomberg.
Levitt, a former broker, argues that the DOL has spent sufficient time and resources putting out the rule designed to ensure that brokers put clients’ interest first, including “years of vetting” followed by several days of public hearings, and has taken into account comments and criticism from “thousands of people.”
As a result, opponents of the rule, which includes Republicans and Democrats in Congress, don’t have a “legitimate argument,” he writes. Their continuing scrutiny of the rule, he adds, will lead to inaction, withdrawal of funding and political support for the rule and, eventually, its “demise.” As they — and their paymasters — fully hope.
Critics of the rule argue it will hamper advisors in complex regulation and — on account of cost — lead to middle- and low-income investors getting squeezed out from financial advice altogether.
Levitt likens some lawmakers’ insistence on continuing to study the DOL rule to his time in the SEC in the 1990s, when he tried to prohibit audit and accounting companies from being able to push additional high-margin consulting services on their clients. Of course that objection was well placed, he argues given gross auditing malfeasance around shady outfits like Enron andWorldCom.
Levitt warns against repeating this mistake — essentially letting lobbyists derail prudent regulation — with the DOL rule. By the time the auditors were forced to behave by Sarbanes-Oxley in 2002, investors had lost “billions” in just the year prior.