Echoing an idea he advanced last week at a retirement industry symposium,Rep. Peter Roskam, R-Illinois, suggested the Department of Labor’sproposed fiduciary rule is part ofthe Obama Administration’s larger effort to force control of thecountry’s retirement savings into the hands of government.

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“The Administration’s own regulations, as well as publiccomments, have made it clear that they don’t want Americans to havecontrol over how much to invest, which investments to choose, andwhen to draw down their accounts in retirement,” said Roskam inopening remarks at today’s House Ways and Means Oversightsubcommittee hearing on the fiduciary rule.

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“The road to hell is paved with good intentions,” added Roskam.“The reality is this regulation would prevent many people fromgetting any investment advice at all.”

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Roskam tied the DOL’s rulemaking efforts to President Obama’scall for new rules to facilitate state-run retirementprograms for workers in the private sector.

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He cited the experience of public pension fund management in hisown state—Truth in Accounting recently calculated Illinois’ unfunded pension liabilitiesat $111.5 billion—as a caveat against state management of privatesector retirement funds.

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“Given the extent of mismanagement and underfunding in existingpublic pension plans, which are underfunded by some $4 trillion, Ican’t think of a better way to undermine the retirement security ofAmericans than to push them out of the private sector and intogovernment-run public pension plans that are absolutely failingworking families today,” said Roskam at today’s hearing.

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The DOL decision to not re-propose a rule in spite of nearly3,000 comment letters and “hundreds” of formal concerns issued by congressionalmembers of “all ideological bents” suggests regulatorsare moving forward “with impunity,” added Roskam.

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Roskam made that claim in spite of comments from Timothy Hauser,deputy assistant Secretary of Labor, made earlier in the week atthe Investment Management Consultants Association inWashington.

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“You’re likely to see that feedback’s going to be reflected inthe final rule,” said Hauser, according to reporting in InvestmentNews.

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He specifically said the DOL is mulling changes to the proposedBest Interest Contract Exemption, the controversial provision thatwould require extensive fee disclosures on commission-basedinvestment products.

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Opponents of the rule say that it would force lower-incomeinvestors into fee-based accounts, which could cost more forinvestors than existing commission-based models.

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Also today, the House Financial Services Committee will mark upthe Retail Investor Protection Act, thebill sponsored by Rep. Ann Wagner, R-Missouri, that would insistthe Securities and Exchange Commission would be the lead regulatorin writing a new fiduciary rule.

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SEC Chair Mary Jo White has said thecommission is only at the initial stage of formulating its ownrule.

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Proponents of the DOL’s proposed rule claim Rep. Wagner’s billamounts to nothing more than a Wall Street-backed red herringdesigned to obstruct finalizing a rule that is based on five yearsof industry input.

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“The bill being considered today is a charade that looksreasonable, but is really just Wall Street’s latest attempt to killa long overdue, modest, and sensible rule proposed by DOL toprotect Americans saving for retirement,” said Dennis Kelleher,President and CEO of Better Markets, and advocacy for financialmarket reform and a strong supporter of the DOL’s proposal.

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Today’s witnesses at the House Oversight hearing includedBradford Campbell, an ERISA attorney and former head of Labor’sEmployee Benefits Security Administration, who testified that theDOL’s own data in 2011 shows that IRA investors lose more than $100billion a year due to lack of investment advice.

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Opponents of the DOL’s proposal say it would disincentivize thefinancial services industry from providing advice to lower andmoderate-income Americans.

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And Paul Scott Stevens, CEO of the Investment Company Institute,testified that the White House Council of Economic Advisers’ datathat claims investors lose $17 billion a year to conflicted advice“does not stand up when tested against the data.”

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Stevens said the proposal would result in net losses toinvestors of $109 billion over 10 years.

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Damon Silvers, special counsel to the AFL-CIO, defended the CEAestimates on savings lost to conflicted advice.

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“Let’s be clear about what this rulemaking is about. It is notabout whether investment advice is a good idea. Of course it is—butonly if it is advice that is in the investor’s best interest,”testified Silvers.

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“The question for members of Congress in evaluating thisrulemaking is: should we put the onus on your constituents toprotect themselves from the costs of conflicted advice or should wecreate a set of rules for fair play,” asked Silvers.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.