Labor Nominee Pledges to Follow Trump’s Order in Reviewing Fiduciary Rule
March 23, 2017 by Yuka Hayashi
WASHINGTON—Labor secretary nominee Alexander Acosta said Wednesday he would closely follow President Donald Trump’s order to review a landmark retirement-advice rule, stressing that the White House has laid out clear guidelines for determining whether the Obama-era regulation should be repealed or revised.
Speaking at a Senate confirmation hearing Wednesday, Mr. Acosta said the president’s February executive action requires the Labor Department and its new chief to assess three specific questions when reviewing the regulation known as the fiduciary rule: whether it will reduce the investment options available to investors, whether it will increase litigation and whether it affects retiree investors financially.
The Labor Department this month proposed delaying the rule’s implementation, scheduled for April 10, to allow Trump administration officials to re-evaluate it. The fiduciary rule, which the financial industry and Republican lawmakers have opposed for years before it was rolled out last year, requires brokers to act in the best interest of investors when working on tax-advantaged retirement plans such as individual retirement accounts, or the IRAs. Previously, they were required to offer only “suitable” guidance, a less-rigorous standard.
“The executive action directs the secretary of Labor and the Department of Labor to repeal or revise the fiduciary rule if any of the criteria laid out in that executive order is found,” Mr. Acosta said. “So that criteria really regulates and determines the Department of Labor’s approach to the fiduciary rule.”
Mr. Acosta, Mr. Trump’s second Labor nominee, had a testy exchange with Sen. Elizabeth Warren (D., Mass.), a fierce proponent of the fiduciary rule.
“How committed are you to protecting the American investor?” Ms. Warren asked him.
“If the question is do I think it’s important to protect the American retiree, absolutely,” Mr. Acosta said. “I understand that particularly with the demographic changes that we are seeing, retirees are shifting from 401(k)s to IRAs.”
As it proposed the delay, the Labor Department reopened the public-comment period for the rule to seek feedback from consumers and industry. Comments are accepted for 15 days regarding the proposed delay, and for 45 days on issues raised by Mr. Trump in his executive order.
Mr. Acosta, who has been dean of Florida International University College of Law since 2009, earlier served as public prosecutor and had stints as a member of the National Labor Relations Board under President George W. Bush and assistant attorney general for the Justice Department’s Civil Rights Division.
During the hearing, Mr. Acosta summarized his vision on regulations, emphasizing the need to ease burdens on small businesses.
“I think it’s important that we eliminate regulations that are not serving a useful purpose because they are impeding small business,” Mr. Acosta said. “Small business is what creates jobs in this country,” he added, saying seven out of 10 jobs in the U.S. are estimated to be created by small business. “If we are going to create jobs, we need to free up small business.”
Write to Yuka Hayashi at yuka.hayashi@wsj.com
