Retail Investor Protection Act

Floor Speech

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Mrs. WAGNER. Mr. Speaker, I first want to thank Chairman Hensarling and Chairman Garrett for their leadership in bringing this bill to the floor today. I also want to thank my Financial Services Committee colleagues on both sides of the aisle for their work and support of this bill.

Mr. Speaker, in recent weeks, we have been caught up in a fierce debate over the imperiled balance sheet of our Nation. It goes without saying that for a Nation that is $17 trillion in debt, getting our Federal balance sheet under control remains of extreme importance for future generations of Americans.

We must also keep in mind these days that it is not just the Federal balance sheet that is upside down. Indeed, the household balance sheet of American families is under some of the greatest stress we have seen in decades. Median household income has declined by $2,400 since the previous recession ended in June of 2009. Millions of Americans remain out of work, and an alarming number of our fellow citizens have flat-out given up on their search to find a job. Recent studies have shown that an alarming percentage of Americans do not have adequate savings set aside for their retirement. The fact is that many families in Missouri and all across the country are struggling just to make it to the 15th and the 30th of every month, let alone finding the ability to put something away for retirement or for a rainy day.

Regrettably, despite all of these economic challenges, two Federal agencies are on a path towards making it even harder for our fellow citizens to save and invest money for the future. At issue are attempts by the Department of Labor and the SEC to increase the liability of financial professionals that provide services to hardworking families all across our country. These new rules are likely to impose tremendous new burdens on Main Street businesses and will take choices away from hardworking families who understand better than anyone else what investments are in their ``best interest.''

For example, when the Department of Labor originally proposed the new ``fiduciary'' rules in 2010, it was pointed out by several commentators and by Republicans and Democrats in Congress that the likely result would not have been enhanced investor protection. Rather, scores of low- and moderate-income Americans would have suddenly found themselves unable to work with a financial professional and unable to make investments that would help them achieve financial security for their future.

Similar dynamics are at play with the SEC. Without providing any evidence of investor harm, the SEC is heading towards a rulemaking that could disrupt the valuable relationship that Americans have with their financial professionals. Perhaps most concerning, these two agencies appear to be on a collision course with one another and could end up issuing two very different and conflicting rules.

Recently, the SEC issued a 72-page request for information to support a rulemaking, but nowhere, nowhere in this request did the SEC mention the Department of Labor's fiduciary project or its effect on the SEC's work. So despite the claims we have heard from both agencies, it doesn't appear that there is much coordination going on at all. This suggests that we are heading toward a situation where rules come into conflict with one another, creating a great amount of confusion and cost for businesses and retail investors.

That brings us to H.R. 2374, the Retail Investor Protection Act, which passed the House Financial Services Committee in June by a bipartisan vote of 44-13. To those who are just tuning in to this debate, it may help to understand exactly who it is we are talking about when we use the term ``retail investor.''

``Retail investor'' could describe two young working parents that are trying to figure out ways to save for that first home. It could describe a single mother who has scraped together $1,000 to open up an IRA or an educational account for her child. Or it could describe a new dad looking to set up an insurance policy for his family.

It is these Americans that will be hurt the most by overbearing and misguided rules that prohibit them from making investments they both want and desperately need.

So the underlying legislation is quite simple. First, it requires that the Department of Labor wait for the SEC to act before issuing new fiduciary rules. I would note that a recent letter from 10 Democratic Senators to the Office of Management and Budget made this very same request.

Second, the legislation requires that the SEC identify whether investors are being harmed or disadvantaged under current regulations. In other words, the SEC would have to identify a problem it is trying to address. The SEC would also have to identify whether new rules would restrict investor access to financial products and services and show that any final rule would actually reduce any confusion investors have over standards of conduct within the industry.

In short, this bill brings much-needed checks and balances to a regulatory process gone bad.

We must remember what is at stake here. Americans invest trillions of dollars through IRAs, education accounts, and other investment vehicles. The Retail Investor Protection Act would require that Federal agencies act in the best interest of all investors and would go a long way towards preserving access to financial services for Americans of all income levels.

I thank my colleagues again for their support, and I urge passage of the bill.

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Mrs. WAGNER. Mr. Speaker, I rise in opposition to the amendment. The language of the amendment attempts to sound benign, but its inclusion would undermine a key tenet of the legislation, which is a requirement that the Department of Labor wait for the SEC to finish any rulemaking in this area.

It has been noted time and time again by Chairman Hensarling and others that 10 Democratic Senators recently sent a letter to the Office of Management and Budget requesting that Labor wait on the SEC. So there seems to be bipartisan and, as we have stated before, bicameral consensus for the process here.

I also must say that I find some of the terms in the amendment particularly troubling. The amendment would allow the Department of Labor to define what constitutes a ``financial services provider,'' a term that I believe is broad and which I am not sure the Department of Labor has either the expertise or the jurisdiction to rule upon.

Paragraph 3 of the amendment also states that the Department of Labor's rules should provide for ``reasonable compensation'' within the industry. I, for one, do not believe that it is up to the Federal Government to determine what constitutes reasonable compensation. That is a determination that belongs to consumers and to investors who I believe are more than capable of determining for themselves what is reasonable.

The Retail Investor Protection Act would require that Federal agencies act in the best interest of all investors and would go a long way towards preserving access to financial services for Americans of all income levels. This, Mr. Speaker, is about access. It is about availability. It is about affordability for hardworking American families and investors.

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