Obama vetoes attempt to undo retirement savings rule

[TomCADem]

Source: USA Today

WASHINGTON — President Obama vetoed an effort to roll back new rules intended to protect retirement savings Wednesday, solidifying his administration's regulations requiring investment advisers to look out for their clients' best interests.

"The Department of Labor's final rule will ensure that American workers and retirees receive retirement advice that is in their best interest, better enabling them to protect and grow their savings," Obama said in a veto message to Congress. "It is essential that these critical protections go into effect."

It was Obama's third veto this year, and the 10th of his presidency. Half of those vetoes have been on similar attempts to block his executive actions on issues like greenhouse gas emissions, clean water and union elections.

In this case, congressional Republicans had sought to use a rarely successful maneuver under the Congressional Review Act to overturn what's known as the fiduciary rule, a Department of Labor regulation prohibiting investment advisers from selling products with higher fees or lower returns just because they yield higher commissions.


Read more: http://www.usatoday.com/story/news/politics/2016/06/08/obama-vetoes-attempt-undo-retirement-savings-rule/85608620/

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Wow. Republicans seeking to over turn a rule requiring investment advisers to look out for their clients' best interests? Amazing the shamelessness.

[DemMomma4Sanders]

1. The anti-worker party being anti-worker again

Obama is the best President we have had, and will have I imagine for some time ahead.

[Ilsa]

2. And we know Trump would have signed it.

And yet johnny redneck would blame Obama because his 401(k) broker put his $7,000 in a high fee, low growth fund.

[moonscape]

21. Or Cruz or Rubio or dang near any of them n/t

[Ash_F]

3. I have been critical of him but credit where credit is due

He could have caved and the press would have given the republicans(and him) a pass.

[BumRushDaShow]

4. The 2 parties are the same

according to some on DU.

[ProfessorGAC]

5. This Whole Thing Baffles Me

Aside from the people actually making the commissions, why would anybody think that a person managing somebody else's money doesn't have a responsibility and fiduciary duty to manage that money in the best interest of the people who actually own that money?

Yeah, i know, unchained campaign financing, but if that's the case, then the politicians are openly admitting they've been bribed.

[Snarkoleptic]

6. Yet there is no shortage of folks who've been propagandized to think that gubmint

needs to get out of the way and let the invisible hand of the free market work everything out. What they fail to realize is that government is supposed to prevent corporate predation.

[ProfessorGAC]

8. Yeah, That's A Problem!

Those folks conveniently forget the "promote the general welfare" phrase, don't they?

[bemildred]

7. I think you've got it exactly right. nt

[ProfessorGAC]

9. Well B, That May Be

But, i'm still baffled! So, i'm dead solid correct and still don't get it! Go figure!

[bemildred]

10. I'm not saying it makes sense, but it is what they do.

They fear the moneybags more than they fear us, the Congresspersons do, and they are fearful creatures. And it is largely their own doing, because they take the money.

[ProfessorGAC]

13. We're Agreeing B!

I guess i'm baffled about how it became that transparent. Nobody's even trying to hide from it.

[bemildred]

14. It is a marvelous thing, it is.

[Yupster]

12. Here's the companies' complaints

The problem is how do the companies figure out how they can prove they are conforming to this rule.

They've been pulling their hair out the last two years as this has come in and out of comment period.

The bottom line is Managed Money or Wrap accounts conform to the rule so companies will be moving more people toward them. This has been a trend anyway but it will be greatly accelerated.

What's wrong with that? Here's their complaints.

1. It will greatly increase costs for many investors. Let's say you bought 100 shares of stock 10 years ago in each of Coca Cola,, Chevron, Proctor and Gamble, Apple, Walmart and Disney. You paid say 1 % to buy them 10 years ago but since then haven't paid any more commissions because you haven't done anything. If you go to a wrap account you will pay something like 1.5 % a year to hold the account.

2. Small investors will lose their advisers. The wrap accounts come with responsibilities like meeting once a year or every six months or so. Currently this client can call the broker if he ever has a question or wants to buy or sell something. He may not meet with the broker in years. If the broker has to set an appointment to meet twice a year to get his share of the 1.5 % fee, that person will get unassigned as the $ 30 a year fee won't let the broker keep his office open, licenses funded, rent paid, and secretary paid. Many companies have already been doing this with higher account minimums. This rule will accelerate that trend.

Hope that helps.

The three Democratic senators who voted with the Republicans were

Donnelly (IN)
Heitcamp (ND)
Tester (MT)

[ProfessorGAC]

15. Thanks, But I'm Not Buying It

If you do nothing for 10 years, there are no administrative costs, except in the accounting world.

The small investor either has a lot of money in funds in which the return is after administrative costs or let's money ride and doesn't need an advisor on a routine basis. If the latter weren't true, then your point #1 wouldn't apply.

I get what you're saying. I just don't agree with the companies that are saying that.

[Yupster]

16. I have to go out for a while

so won't be here to see your response until tonight, but I honestly don't understand your response.

Maybe my long post wasn't clear.

Some investors just want to buy 100 shares of KO and don't want to be bothered unless there's something wrong with KO. The account sits there, no cost to the client, little cost to the broker. Moving that investor to a Wrap account would not be what the client wants and would cost him more. And the broker will send him away to an 800 # because the wrap fee won't cover the cost of the half hour meeting twice a year that he will be required to have that the client doesn't want.

Also, if the small investor has a lot of money in funds, how can he be a small investor?

Honestly, I'm having trouble understanding the points you're making.

Also, if a mutual fund charges 0.9 % a year to run it, that money doesn't go to the broker. He may get .15 % after the split with the mutual fund company to run it and his own home office.

[ProfessorGAC]

20. No, I Get It

I just think those sound like excuses to not be responsible with other people's money to increase commissions.

Not accusing you of it. You said those were what the companies were saying. I'm saying i don't accept their reasons.

[Yupster]

25. The brokers will make way more money

using wrap accounts than normal stock or mutual fund accounts.

Don't worry about the brokers. This new rule will make them much richer.

The ones complaining are doing it because they don't want to double the prices on their long-term customers.

On edit -- have you seen these commercials about "If the market is down two quarters in a row, we'll give you your fees back?" That's these wrap fees that companies are pushing people towards. The commercial sounds good, but why don't I just stay with the account that I currently have that doesn't have any wrap fee for you to give back to me sometimes.

[MGKrebs]

18. I would say it is unlikely they would have to prove that.

Someone would would have to sue the broker or bring charges up against the broker and it would be up to that plaintiff to try to prove that the broker broke the law. I'm not a lawyer but I think the burden is on the plaintiff. If the defendant can offer any reasonable support for their behavior they should be OK. If there is a bunch of evidence that they almost always go to the high fee- low gain products they may be in trouble.

[Yupster]

24. The standard was that the broker would have to show

that the investor was suitable based on age, risk tolerance, wealth, income, etc.

The new standard is much tougher on the broker. He has to prove the investment he recommended was in the client's "best" interest. Brokerage companies are afraid that will open the floodgates to lawsuits. If you buy KO stock and it goes broke, then obviously that investment wasn't in the client's best interest.

Firms are reacting by pushing everyone to the same pre-approved investment packages.

[Yupster]

35. The problem is how do you prove the investment you recommended

was in the best interest of the client?

Should I recommend an individual stock or a mutual fund? Each has their advantages but five years later one will do better than the other. Which one? No one knows.

If I recommended the one that didn't do as well did I recommend what was in the best interest of the client? Obviously not. The companies have spent hundreds of millions of dollars trying to figure out how to comply with this rule.

What they've come up with was to get prepackaged, preapproved investment baskets that the regulators like and push everyone into them.

It will increase costs to investors greatly. Will it do better for investors? For some yes, for others no.

[yardwork]

11. I hope this is featured in Democratic ads.

[d_legendary1]

17. Wait...this shit got past Congress?

are the Dems in the senate doing? 3 Dems joined the Cons in this vote. And I thought the rule was that it took 60 votes to pass something, not 56 unless they used cloture. I know the Senate makes up its own rules but if they changed why didn't Reid make it a 51-49 rule so they can get shit done faster when he had the majority? We could have had four jobs bills that Pelosi passed that could have put Americans back to work.

[TomCADem]

19. I see it as Dems wanted an actual vote on this...

...knowing the President will veto and to underscore the importance of having a Dem in the White House.

Other times, I can see Senate Dems wanting to take all the credit for killing a bill beyond merely voting against it.

[Yupster]

28. The Democrats had no power to force a vote or not

They don't control either house.

[TomCADem]

32. Right, Which Is Why Republicans Brought Up This Bill

They are in control of the Senate and they wanted to over turn the requirement that financial advisors perform their job with the interests of their client's at heart as a fiduciary.

[Yupster]

27. This was not a law

There wasn't any vote on it.

The administration just announced it as a new regulation.

The senate and House then voted to block the new regulations. The blocking passed both houses and the President vetoed the blocking.

[d_legendary1]

33. I never said it was a law

I was complaining about how three Democrats in the Senate went along with this farce to prevent Obama from looking out for retirees. And how is it possible that 56 votes gets a law passed in the Senate? When Reid was in charge it took 60 votes to get anything done. Was Reid that much of a dumbass in setting the Senate rules?

[Yupster]

34. 51 votes to pass the senate

60- to end the filibuster.

Reid didn't filinbuster it because Obama was perfectly happy vetoing it.

[forest444]

22. Thank you, sir.

This is the President Obama we elected. If only he would show such fortitude against the TPPee.

[democrattotheend]

23. But, but, he's a corporate shill!

I thought the president was a Wall Street puppet?

[Agnosticsherbet]

26. Thank You, Mr. President.

We need to take back the Senate.

[valerief]

29. There is not one decent Republican politician. If pe were decent, pe wouldn't be a Republican

to begin with.

[AngryAmish]

30. Obama just took every whole life insurance Barker behind the shed and shot them.

Terrible investment. Good on my President.

[Yupster]

31. This rule is for IRA's

Annuity broker maybe, but whole life wouldn't apply to IRA's.

[andym]

36. This veto is what being against corporate excess means.

Obama shows the difference between Democrats and the GOP on corporate regulation.