Senate Committee Majority Report Says DOL Fiduciary Rulemaking Emphasizes Speed over Care
The Senate Homeland Security and Governmental Affairs Committee (the "Committee") published a report by its majority staff that examined the process that led to the DOL's fiduciary rulemaking on retirement plans. The report asserts that the DOL "prioritized the expeditious completion of the rulemaking process at the expense of thoughtful deliberation," and that the DOL (i) disregarded "many" concerns raised by SEC staff, as well as by regulatory experts from the Office of Information and Regulatory Affairs ("OIRA") and the Office of Management and Budget ("OMB"), (ii) declined to implement recommendations from the SEC, the OIRA and the U.S. Treasury Department ("Treasury"), and (iii) permitted political appointees at the White House to play "a key role in driving the rulemaking process at the inception of the redrafting effort."
Specifically, the Committee found that:
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emails between DOL and SEC staff reflected a "discord between the agencies about the rulemaking";
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the DOL declined to fully resolve "at least" 26 items of concern identified by SEC staff regarding the substantive content of the proposed rule;
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the DOL ignored the requirements in Executive Orders 12866 and 13563 that it quantify the costs and benefits of alternative approaches;
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the DOL published its rulemaking proposal less than two weeks after circulating a draft about which the Treasury raised concerns that the rule flew "in the face of logic" and was "contrary to Congressional intent";
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a DOL staff member wrote to senior White House advisors about the difficulties of completing the "regulatory impact analysis," finding support for the view that there was a "market failure," and monetizing the "potential benefits of fixing [that failure]"; and
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the DOL rejected OIRA's recommendation that language be added to the proposed rule stating that it would "permit firms to continue to rely on all common fee and compensation practices. . . ."
In its report, the Committee also accused the DOL of practicing "continuous obstruction" by failing to provide requested documents to the Committee Chairman, Senator Ron Johnson (R-WI), and the majority staff, and of urging the SEC to "similarly hinder" Senator Johnson.
