Retail Investor Protection Act

Floor Speech

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Mr. ELLISON. I want to thank the ranking member, Congresswoman Waters, for the time, and I thank the chairman.

We have a crisis in our country, and the crisis has to do with retirement. This retirement crisis is huge. We literally have about $6.6 trillion between what people have for retirement and what they need for retirement.

And so the Labor Department is doing what makes sense: making sure that when a person representing themselves as a financial adviser is going to a person who wants to retire--rollover a 401(k) or whatever--they are getting the best advice for them, and if the adviser is making money off the products they are pushing, that that would not be all right.

But you know what? The Labor Department is not even done with the rule. They are still writing it. But before they ever do, this shoddy piece of legislation is going to try to interrupt that process. This bad piece of legislation is going to interrupt the Department of Labor as they are pulling together a rule to protect retirees.

We have a record amount of more than $10 trillion invested in retirement accounts, and yet median retirement account balances are about $45,000. That is a huge gap. Part of the reason this amount is so low is due to the high fees and hidden commissions. An annual fee of 1 percent could lower the amount of an account by 21 percent over more than 30 years.

I am grateful to the Department of Labor for their efforts to come together to do a good plan. Too often, workers leave jobs and are contacted by people who urge them to rollover their 401(k) investment into an IRA. Too often, workers do not know that these callers are salespeople who can put investors into accounts with high fees and hidden commissions, yet this bill would not protect the public from such rip-offs. Investors lose 3, 4, or 5 percent of the value of their savings without even knowing about it.

This bill, H.R. 2374, is harmful. It prevents the Department of Labor from taking steps to ensure advisers do not have conflicts of interest. Why would anybody want to say, yes, have all the conflicts of interest you want as you are messing with our retirees' accounts?

Taking the unprecedented step to stop an agency midprocess in protecting workers is bad. That is why AARP, the National Council of La Raza, the Consumer Federation of America, and many, many people representing Americans oppose it.

This antigovernment rhetoric and all this stuff about government regulation we hear all the time is the same rhetoric that led to the shutdown that undermined the interests of American workers. Let's just shut this bill down. It is not good.

Statement of Administration Policy

The Administration strongly opposes passage of H.R. 2374 because it would derail important rulemakings underway at the Securities Exchange Commission (SEC) and the Department of Labor that are critical to protecting Americans' hard-earned savings and preserving their retirement security.

H.R. 2374 prohibits Labor from issuing a rule to protect investors until the SEC engages in and completes further study of the effect of a rulemaking on retail investors. The bill ignores the fact that significant work has already been conducted in both agencies and that the agencies have included and continue to include the public, industry, and numerous stakeholders in their rulemaking processes. Moreover, the two agencies are already working closely to avoid conflicting requirements for the regulated community, and this legislation would hamper effective coordination between the two agencies. The bill would hinder efforts to protect consumers from conflicts of interest among brokers, dealers, financial advisors, and others whose incentives may be misaligned with investors, potentially leading to deceptive and abusive practices.

The Administration is committed to ensuring that American workers and retirees are able to receive advice about how to invest their money in safe, secure, and transparent financial products that is free from harmful conflicts of interest. These ongoing rulemakings are designed to protect trillions of dollars in retirement savings of millions of workers and retirees by ensuring that paid advisors and other entities do not place their own financial interests over those of their customers. This legislation would place an unnecessary obstacle in the way of these efforts to prevent such harmful conflicts of interest, which hurt businesses, consumers, and retirees and their families.

If the President were presented with H.R. 2374, his senior advisors would recommend that he veto the bill.

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