When a member of Congress wants to rein in a regulator, the classic strategy is to send them a letter with a long list of questions and a short deadline for response. Senate Homeland Security and Governmental Affairs Committee Chairman Ron Johnson (R-Wis.) recently sent such a letter to Department of Labor (DOL) Secretary Thomas Perez. The subject was DOL's efforts to strengthen protections for retirement savers by closing loopholes in a rule that requires advisers to act in their customers' interests instead of their own.
The revised rule proposal is reportedly set to go to OMB for review, the final step before being issued for public comment. When it publishes the rule for comment, DOL has promised to include both guidance on how it would be implemented (known as "prohibited transaction exemptions" or PTEs) and an extensive economic analysis showing the harm to retirement savers that demands a regulatory response. Financial services firms and their lobbyists have vowed to kill the rule, preferably before it and the accompanying economic analysis ever see the light of day.
At the top of the Johnson letter's list of questions is one seeking assurances that the rule won't "adversely affect middle and low-income Americans." This is taken straight from industry talking points. Since this concern over middle-class access is a phony claim based on a false premise about the DOL's expected regulatory approach, it should be a breeze for Secretary Perez to answer. After all, DOL officials have already answered it many times before.
Or we could just wait until DOL puts the rule out for public comment. Then we could all judge for ourselves whether it meets DOL's promise to provide flexibility for financial firms and strengthened protections for retirement savers. But, of course, a debate on the facts is precisely what financial firms are trying to avoid.