An editorial from The Wall Street Journal this AM highlights how “holdovers from the Obama Administration” are refusing to accept the President’s directive to review the costly fiduciary rule that only hurts consumers.
EditorialApril 13, 2017
Now we know one reason Democrats blocked President Trump’s first nominee to be secretary of Labor: The bureaucracy is in open rebellion against the new President’s directives. The casus belli is the fiduciary rule, the attempt by Obama Labor Secretary Tom Perez to rewrite the rules for offering investment advice. The rule was supposed to go into effect Monday.
Proponents argued that the new rule would raise the standards for advice given to retirement investors. In reality, it would make that advice more expensive while opening up another lucrative vein for the plaintiffs bar. In anticipation of the rule, some financial firms have already announced they are dropping their business for these small investors.
That’s one reason President Trump last month directed the Labor Department to review the rule. Specifically, the President asked Labor to investigate whether the rule is likely to reduce access to retirement-savings vehicles or related financial advice, whether the rule has caused disruptions in the industry that may harm retirees and investors, and whether it will lead to more lawsuits. If a review determines any of these things had happened, the department is to propose revising or abolishing the rule.
So what was the Labor response? Last week the holdovers from the Obama Administration announced that “the Department has concluded it would be inappropriate to broadly delay application of the fiduciary definition and Impartial Conduct Standards.”
Translation: We don’t care what an elected President says.
The Perez loyalists know that Mr. Trump’s second nominee, Alex Acosta, hasn’t been confirmed and will take time to settle in once he is. The review of the fiduciary rule won’t be completed for months, and the rule is being challenged in court. By refusing to delay implementation of the rule in its entirety, the bureaucracy hopes to entrench its main features so it will be too late or too costly or too difficult to do anything about it, even if a review ultimately concludes it was a mistake.
The slow pace of Trump nominations has encouraged this kind of rebellion across the executive branch, as Obama holdover Sally Yates showed when she still ran the Justice Department. Mr. Trump’s deregulation project is one of the keys to faster economic growth, and he needs his people on the job as fast as possible.