[Congressional Record Volume 159, Number 152 (Tuesday, October 29, 2013)]
[House]
[Pages H6855-H6869]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     RETAIL INVESTOR PROTECTION ACT

  Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 391, I call 
up the bill (H.R. 2374) to amend the Securities Exchange Act of 1934 to 
provide protections for retail customers, and for other purposes, and 
ask for its immediate consideration.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 391, in lieu of 
the amendment in the nature of a substitute recommended by the 
Committee on Financial Services printed in the bill, an amendment in 
the nature of a substitute consisting of the text of Rules Committee 
Print 113-23 is adopted, and the bill, as amended, is considered read.
  The text of the bill, as amended, is as follows:

                               H.R. 2374

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Retail Investor Protection 
     Act''.

[[Page H6856]]

     SEC. 2. STAY ON RULES DEFINING CERTAIN FIDUCIARIES.

       After the date of enactment of this Act, the Secretary of 
     Labor shall not prescribe any regulation under the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1001 et 
     seq.) defining the circumstances under which an individual is 
     considered a fiduciary until the date that is 60 days after 
     the Securities and Exchange Commission issues a final rule 
     relating to standards of conduct for brokers and dealers 
     pursuant to the second subsection (k) of section 15 of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78o(k)).

     SEC. 3. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.

       The second subsection (k) of section 15 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78o(k)), as added by section 
     913(g)(1) of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act (12 U.S.C. 5301 et seq.), is amended by adding 
     at the end the following:
       ``(3) Requirements prior to rulemaking.--The Commission 
     shall not promulgate a rule pursuant to paragraph (1) 
     before--
       ``(A) identifying if retail customers (and such other 
     customers as the Commission may by rule provide) are being 
     systematically harmed or disadvantaged due to brokers or 
     dealers operating under different standards of conduct than 
     those standards that apply to investment advisors under 
     section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 
     80b-11); and
       ``(B) identifying whether the adoption of a uniform 
     fiduciary standard of care for brokers or dealers and 
     investment advisors would adversely impact retail investor 
     access to personalized investment advice, recommendations 
     about securities, or the availability of such advice and 
     recommendations.
       ``(4) Requirements for promulgating a rule.--The Commission 
     shall publish in the Federal Register alongside the rule 
     promulgated pursuant to paragraph (1) formal findings that 
     such rule would reduce the confusion of a retail customer 
     (and such other customers as the Commission may by rule 
     provide) about standards of conduct applicable to brokers, 
     dealers, and investment advisors.
       ``(5) Requirements under investment advisers act of 1940.--
     In proposing rules under paragraph (1) for brokers or 
     dealers, the Commission shall consider the differences in the 
     registration, supervision, and examination requirements 
     applicable to brokers, dealers, and investment advisors.''.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider the further amendment printed 
in House Report 113-253, if offered by the gentleman from California 
(Mr. George Miller) or his designee, which shall be considered read and 
shall be separately debatable for 20 minutes equally divided and 
controlled by the proponent and an opponent.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Waters) each will control 30 minutes.


 =========================== NOTE =========================== 

  
  October 29, 2013, on page H6856, the following appeared: the 
gentleman from Massachusetts (Mr. LYNCH)
  
  The online version should be corrected to read: the gentlewoman 
from California (Ms. Waters)


 ========================= END NOTE ========================= 

  The Chair recognizes the gentleman from Texas.


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days within which to revise and extend their 
remarks and include extraneous material in the Record on H.R. 2374, 
currently under consideration.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. HENSARLING. Mr. Speaker, I yield myself as much time as I may 
consume.
  Mr. Speaker, at a time that the American people demand and deserve 
that Democrats and Republicans work together to fix real problems in 
our Nation, today this body has the opportunity to do just that.
  Today the House will consider H.R. 2374, the Retail Investor 
Protection Act. The bill has strong support from both Democrats and 
Republicans. In fact, it passed the Financial Services Committee 
earlier this year on a strong bipartisan recorded vote, including 
half--half--of our committee's Democrats.
  H.R. 2374 will ensure that hardworking families and individuals 
throughout our country who are trying to save for their retirements, 
save for their children's college education, saving for their first 
home are not harmed by confusing, costly regulations coming out of 
Washington.
  Mr. Speaker, all Americans know that a flood of Washington red tape 
has hurt our economy. That is why tens of millions of our fellow 
countrymen remain either unemployed or underemployed. Unfortunately, 
even more regulations are on the way.
  Specifically, today, Mr. Speaker, we are here speaking about the 
Securities Exchange Commission and the Department of Labor, which are 
headed toward proposing two massive and inconsistent rulemakings that 
are going to hurt the ability of retail investors to get financial 
advice that they need for their portion of the American Dream.
  Mr. Speaker, retail investors are not big-time professionals on Wall 
Street. Retail investors had no role in causing the financial crisis, 
and they should not be punished for it which, regrettably, this 
rulemaking could do.
  Rather, retail investors are ordinary, hardworking citizens from all 
of our congressional districts who buy and sell securities for 
themselves, their families and their futures, not for a company.
  And in this struggling economy, when people who need help most, what 
are the SEC and the Department of Labor planning to do? They are 
planning to make it harder and more expensive for these Americans to 
get the financial advice that they both want and need.
  Perhaps even more incredibly, the SEC, the Securities and Exchange 
Commission, is moving forward with this new regulation even though the 
agency has failed to provide any evidence that it would better protect 
investors.
  So the Securities and Exchange Commission apparently is going to 
regulate first, ask questions later. This makes no sense for millions 
of struggling Americans trying to save for the future.
  Mr. Speaker, again, we know that millions of middle class families 
are sitting around their kitchen tables struggling to save and invest 
in order to make ends meet. Every day, millions of them turn to 
financial professionals for advice.
  Yet here comes from Washington regulations that will make that advice 
either unavailable or unaffordable, so fewer Americans will get the 
advice they need. That is unfair.
  Let me provide you just a couple of examples, Mr. Speaker. Under the 
current suitability standard, an investor can have an account with a 
low-cost, online broker with whom he or she can both make trades and 
get investment advice.
  Due to technological advances and the relatively low costs associated 
with operating an online platform, these brokers can offer trades and 
investment advice for as little as $7.
  But should a fiduciary standard be applied to these online brokers, 
the impact on investors could be one or all of the following: higher 
fees per trade, higher fees for investment advice, or brokers may 
simply stop providing this investment advice to less affluent customers 
altogether. That is not fair.
  Take the example of the single mother who supports her mother and 
wants to save for her daughter's college education. She has finally 
saved enough money to open up an IRA with $2,000 in savings.
  But we know that should these rules continue to be promulgated, with 
these new Washington regulations, well, this lady may just be told she 
now needs $25,000 in order to open up the very same account.
  Again, Mr. Speaker, patently unfair.
  How about a middle-aged father who works with a financial 
professional. He wants the professional to get him access to products 
and ideas, instead of managing his investment portfolio for him. He 
wants to trade individual bonds, but potential regulations might not 
allow the financial professional to offer him bonds on a principal 
basis.
  So the result? The father either gets worse execution prices or ends 
up paying a whole lot more for his investments.
  Fortunately, one of our colleagues has stepped up to the table. The 
gentlelady from Missouri (Mrs. Wagner) has introduced a commonsense 
bill, the Retail Investor Protection Act, and I and the rest of the 
committee who have voted for it congratulate her for her great work.
  This bill would require the SEC to first consider the potential 
impacts its proposed regulation will have on investors, especially 
those with low and moderate incomes who would lose access to 
personalized investment advice that they need.
  Second, the bill would require coordination between the SEC and the 
Department of Labor. These Washington agencies will have to sequence 
their rulemakings, with the SEC going first, so there will be no 
inconsistent rules that end up confusing and costing investors.

[[Page H6857]]

  The Retail Investor Protection Act that we are debating today will 
avoid regulatory conflict between the SEC and the Department of Labor. 
It is as simple as that.
  Mr. Speaker, even the SEC itself acknowledges that the cost of its 
regulation could ultimately be passed on to retail investors in the 
form of higher fees or lost access to services and products--yet, 
again, unfair.
  It is not what Americans need. It is not what they deserve, 
especially as our economy remains in the throes of the weakest, slowest 
nonrecovery of the last 70 years.
  Mr. Speaker, I urge my colleagues to pass this bipartisan bill, 
again, a bipartisan bill that passed with half of the Democrats on the 
Financial Service Committee choosing to support this commonsense 
legislation. H.R. 2374 will help struggling American families get the 
financial assistance they want and deserve.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1500

  Ms. WATERS. Mr. Speaker, I yield myself such time as I may consume.
  I strongly oppose H.R. 2374, the bill inappropriately entitled the 
Retail Investor Protection Act. Quite the opposite. H.R. 2374 hinders 
the Labor Department and the Securities and Exchange Commission from 
protecting the average retail investor when they save for retirement.
  For the last 2 years, the Labor Department has been updating an 
outdated rule regarding the fiduciary responsibility owed to employee 
benefit plans under the Employee Retirement Income Security Act of 
1974, ERISA, and for Individual Retirement Accounts, IRAs, under the 
Tax Code.
  Today retirees are more likely to rely on 401(k)s than IRAs and are 
less likely to have defined benefit plans from their employers. At the 
same time, financial products have become increasingly complex. The 
cost of rules governing the rights of investors and the 
responsibilities of advisers are more than 35 years old. DOL is 
attempting to modernize these rules in order to reflect the changing 
nature of the retirement marketplace.
  Given these realities, it is necessary for the Department to make 
sure that the professionals offering retirement advice have a duty to 
put their clients' interests first before their own or, at the very 
least, tell their customers that they may be conflicted.
  At the same time, the SEC is considering moving forward on a 
rulemaking that would impose a uniform fiduciary standard of conduct 
for broker-dealers and investment advisers consistent with the Dodd-
Frank Act. This would ensure that whatever the business model, if an 
individual is providing personalized investment advice about securities 
to a retail customer, they would have a duty to put that customer's 
interests before their own. This is particularly important as many 
retail customers are unaware of the differences in the standards of 
care that various professionals owe them.
  Both agencies have been making progress with their rules, collecting 
the necessary data and responding to stakeholder concerns about 
preserving access to investment advice, particularly for individuals 
with small accounts.
  Given these facts, H.R. 2374 is the wrong approach. This legislation 
makes it significantly more difficult for both the SEC and the 
Department to move forward.
  First, the provision requiring the SEC to do a new study, another 
study documenting that investors are being systemically harmed or 
disadvantaged under the existing standard, creates a high hurdle for 
the Commission to overcome. The purpose of this provision is to impose 
further roadblocks before the Commission can take any action, providing 
another avenue for industry to sue the SEC.
  Secondly, H.R. 2374 would prohibit the Labor Department from 
modernizing the fiduciary duty standard under ERISA and the Tax Code 
until the SEC issued their rule. This provision would represent a 
historic abrogation of the Department's unique authority, and in spite 
of whatever pressing need for an updated rule.
  Finally, H.R. 2374 seems premised on the faulty notion that the 
Department and the SEC are not coordinating when, in fact, staff have 
regular ongoing SEC-DOL staff meetings; in addition, leadership 
meetings, as well as a memorandum of understanding to share information 
on retirement and investment matters.
  On behalf of millions of consumers, retirees, and investors, several 
organizations, including the AARP, the Consumer Federation of America, 
the AFL-CIO, and Americans for Financial Reform all oppose this 
legislation. A coalition of financial planning professionals wrote that 
H.R. 2374 is a backdoor attempt to undermine investor protection 
provisions in Dodd-Frank. In addition, SEC Chair White said in a letter 
to the committee that H.R. 2374 would make it difficult for the 
Commission to adopt such a rule.
  Simply put, H.R. 2374 just goes too far. The bill holds the Labor 
Department hostage while throwing out roadblocks for the SEC. Mr. 
Speaker, for these reasons, I urge a ``no'' vote on this bill.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, it is now my pleasure to yield 2 minutes 
to the gentleman from Minnesota (Mr. Kline), the distinguished chairman 
of the Committee on Education and the Workforce.
  Mr. KLINE. I thank the gentleman for yielding.
  Mr. Speaker, it has been 4 years since the recession ended, yet 
economic growth is still anemic, job creation remains sluggish, and 
wages are flat. With each passing day, countless Americans feel they 
are falling further behind. In these difficult times, working families 
shouldn't need to fear yet another regulatory scheme that will make it 
more difficult to rebuild their retirement savings. That is why I 
support the Retail Investor Protection Act, legislation that will force 
the Department of Labor to hit the brakes on sweeping changes to the 
way workers save for retirement.
  For many Americans, investing in a retirement plan can be confusing 
and, frankly, intimidating. Workers want to know their hard-earned 
dollars are managed wisely and in a way that could lead to financial 
security in their retirement years.
  Investment professionals provide a crucial service to those who want 
to plan for their retirement yet lack the time and expertise to manage 
an investment portfolio. All investment advisers should be well 
trained, adhere to the highest ethical standards, and promote the best 
interests of their clients. Rules governing the actions of particular 
investment advisers, also known as fiduciaries, have helped provide 
workers with certainty for decades. However, since 2010, the Labor 
Department has tried to expand the definition and duties of a fiduciary 
and, in the process, diminished that certainty.
  While we support looking for ways to modernize current fiduciary 
regulations, the Department's recent proposal threatens to drive up 
costs, restrict investment opportunities, and harm efforts to educate 
workers about responsible retirement planning.
  Despite bipartisan concerns, Department officials are still pursuing 
this flawed approach behind closed doors. H.R. 2374 will force the 
Department of Labor to abandon this misguided effort and help ensure 
any future attempt to redefine ``fiduciary'' promotes the retirement 
security of America's workers.
  I want to thank Representative Wagner, Chairman Hensarling, and 
members of the House Financial Services Committee for their strong 
bipartisan leadership on this important issue.
  I urge my colleagues to support the Retail Investor Protection Act.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from 
Massachusetts (Mr. Lynch), a member of the Financial Services 
Committee.
  Mr. LYNCH. I thank the gentlewoman for yielding.
  Mr. Speaker, I rise today in opposition to H.R. 2374, the so-called 
Retail Investor Protection Act. Despite its innocuous-sounding title, 
the intent of this bill is not to protect investors, but to protect an 
outdated system that systematically weakens the average American's 
retirement savings protections.
  When Americans sit down across the table from a financial adviser and 
entrust their retirement nest egg, they expect the advice they receive 
to be

[[Page H6858]]

the best financial advice for them. That is why when Congress created 
the Employee Retirement Income Security Act in 1974, it did so with the 
express purpose of protecting employees and their dependents through 
robust disclosure requirements and fiduciary standards of care.
  But the quality of advice they receive is often dependent on whether 
their adviser is an investment adviser or a broker-dealer, a 
distinction which is really a reflection of an accident of chance that 
retail investors typically are not aware of and do not fully 
understand.
  Moreover, as employers have come to back away from defined benefit 
pension plans to defined contribution plans like 401(k)s, average 
workers more often are on their own to weigh advice received directly 
from their financial adviser about how best to invest their retirement. 
The result is a retirement savings system in which many workers often 
are unaware that they are turning over their savings to advisers who 
may have no legal requirement whatever to act in the worker's best 
interest.
  This bill before us today will make it harder for the Department of 
Labor and the Securities and Exchange Commission to protect workers' 
retirement savings at a time when expanding and strengthening those 
retirement savings and protections has never been more important.
  The average Social Security beneficiary receives about $1,200 per 
month, or just under $15,000 per year, representing just 41 percent of 
required pre-retirement income. With the cost of services for 
retirees--such as health care, food, and other essentials--continuing 
to go up, it is more important than ever that Americans have robust 
retirement savings to supplement the modest benefit that Social 
Security now guarantees.
  Unfortunately, this bill before the House today takes us in the 
opposite direction in order to protect its status quo. That is why AARP 
opposes this bill. That is why the AFL-CIO opposes this bill. That is 
why the Consumer Federation of America opposes this bill. That is why 
Americans for Financial Reform opposes this bill. That is why I will 
vote ``no'' on this bill, and I urge my colleagues to do the same.
  Mr. HENSARLING. Mr. Speaker, it is now my pleasure to yield 6 minutes 
to the gentlewoman from Missouri (Mrs. Wagner), the sponsor of the 
legislation and an outstanding freshman member of our committee who has 
led on this issue.
  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.

                              {time}  1515

  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.

                                               Chamber of Commerce


                                     United States of America,

                                 Washington, DC, October 28, 2013.
       To the Members of the U.S. House of Representatives: The 
     U.S. Chamber of Commerce, the world's largest business 
     federation representing the interests of more than three 
     million businesses of all sizes, sectors, and regions, as 
     well as state and local chambers and industry associations, 
     and dedicated to promoting, protecting, and

[[Page H6859]]

     defending America's free enterprise system, strong supports 
     H.R. 2374, the ``Retail Investor Protection Act.'' The 
     Chamber believes that ensuring retail investors have 
     continued access to their choice of financial products and 
     services that best meet their needs will help meet investment 
     objectives, secure retirement security, and bolster long-term 
     economic growth.
       If enacted, the Retail Investor Protection Act would 
     require that the Securities and Exchange Commission (``SEC'') 
     complete a rulemaking on fiduciary standards for broker 
     dealers before the Department of Labor (``DOL'') finalizes 
     its rule redefining a fiduciary under the Employee Retirement 
     Income Security Act, as the two agencies have shown to work 
     at cross-purposes on their fiduciary initiatives. Due to the 
     increasing overlap between the DOL and SEC in the area of 
     retirement plans and the related nature of each agency's 
     fiduciary initiative, the Chamber believes that the two 
     agencies should coordinate and work in a systematic manner, 
     allowing the SEC to complete its rules first to avoid 
     investor confusion, regulatory conflict, and one rule being 
     usurped by the other.
       H.R. 2374 would also require that before the SEC 
     promulgates new rules expanding the fiduciary standard in the 
     retail investor context, it must first (1) identify any 
     issues with the current fiduciary structure; and (2) identify 
     whether uniform fiduciary standards for broker dealers and 
     investment advisors would have any adverse impact, resulting 
     in reduced products and services for retail investors. These 
     are all common sense measures that would ensure the 
     appropriate balance in investor protection while mitigating 
     potentially harmful consequences.
       The Chamber also opposes an amendment expected to be 
     offered by Rep. George Miller and Rep. John Conyers, which 
     would completely undermine the intent of a provision in H.R. 
     2374 by giving DOL free reign to promulgate rules without 
     prioritization and consideration of the SEC's fiduciary 
     initiative. Moreover, the Miller-Conyers Amendment would also 
     deprive owners, directors, and shareholders of the ability to 
     manage a business by authorizing the DOL to set compensation 
     for investment advisors and financial services providers, 
     thus shifting some securities oversight away from the SEC and 
     to the DOL.
       The Chamber strongly supports the Retail Investor 
     Protection Act and opposes the Miller-Conyers Amendment. The 
     Chamber may consider including votes on, or in relation to, 
     this bill and the Miller-Conyers Amendment in our How They 
     Voted scorecard.
           Sincerely,
                                                  R. Bruce Josten,
     Executive Vice President.
                                  ____

                                              National Association


                                             of Plan-Advisors,

                                Arlington, VA, September 25, 2013.
     Congresswoman Ann Wagner,
     Re ASPPA Support of H.R. 2374, the Retail Investor Protection 
         Act

     Cannon House Office Building,
     Washington, DC.
       Dear Congresswoman Wagner: On behalf of the 6,700 members 
     of the National Association of Plan Advisors (NAPA), I would 
     like to express our support for H.R. 2374, the Retail 
     Investor Protection Act. We commend you for your leadership 
     on this important issue.
       As you know, both the Department of Labor (DOL) and the 
     Securities and Exchange Commission (SEC) have indicated they 
     are moving forward with proposed rules that would expand 
     ``fiduciary'' responsibilities to more investment 
     professionals. NAPA is especially concerned that these 
     proposed regulations could increase costs and limit 
     availability of products and advice for retail investors, 
     especially those with low or moderate incomes. Additionally, 
     NAPA is concerned that the regulations could result in retail 
     investors not receiving assistance from their trusted 
     investment professionals based on whether their accounts are 
     after-tax retail accounts or tax-favored IRAs.
       Your legislation includes two provisions that NAPA 
     especially supports. First, it prohibits the DOL from issuing 
     any new fiduciary rules until sixty (60) days after the SEC 
     finalizes its rule. Second, it requires the SEC to identify 
     whether expanded fiduciary standards would result in less 
     access to investment products and advice for retail investors 
     and to submit formal findings that any final rule would 
     reduce retail investor confusion about standards of care that 
     apply to brokers, dealers and investment advisors.
       Again, thank you for your leadership on this issue. We look 
     forward to working with you on passage of this important 
     legislation in both the House and the Senate.
           Sincerely,
                                        Brian H. Graff, Esq., APM,
     Executive Director/CEO.
                                  ____

                                               September 30, 2013.
     Hon. Ann Wagner,
     House of Representatives, 435 Cannon House Office Building, 
         Washington, DC.
       Dear Representative Wagner: On behalf of the Association 
     for Advanced Life Underwriting (``AALU''),\1\ thank you for 
     all of your hard work on H.R. 2374, ``The Retail Investor 
     Protection Act of 2013.'' This bipartisan legislation, which 
     you introduced and led through the Financial Services 
     Committee, will help ensure that any rulemaking undertaken by 
     the Secutities and Exchange Commission (``SEC'') to modify 
     the standards of conduct and other regulatory requirements 
     applicable to brokers, dealers, and investment advisers \2\ 
     is sufficiently supported by empirical information and 
     focused principally on remedying the identified problem of 
     investor confusion without raising costs and reducing choices 
     for investors.\3\
       The SEC is considering whether to engage in a rulemaking 
     that would impose a ``uniform fiduciary duty'' on all 
     brokers, dealers, and investment advisers providing 
     personalized investment advice about securities to retail 
     customers. The sole impetus for such a rule is the SEC's 
     concern about investor confusion over the roles and legal 
     obligations of financial professionals. The SEC appears to be 
     operating from a presumption that the regulatory regime 
     governing brokers and dealers is disproportionately 
     responsible for creating this investor confusion and is 
     seeking to address it by imposing a broad principles-based 
     fiduciary duty on broker-dealers, breaking with eighty years 
     of rules-based regulation.
       The problem of investor confusion does not dictate a 
     regulatory solution of this sort. There is no evidence to 
     suggest that such a rule would provide consumers with better 
     or clearer information about the roles and obligations of the 
     financial professionals that serve them, nor is there reason 
     to believe that it would enable consumers to make better-
     informed investment decisions.
       Indeed, because, as the SEC has acknowledged, a ``pure 
     fiduciary duty'' is unworkable in the context of the broad 
     activities of a broker-dealer, any new fiduciary duty imposed 
     on the industry will include exceptions for various types of 
     activities--leaving investors even more confused as to what 
     the legal obligations of their financial professionals might 
     be. For this reason, the AALU has urged the SEC to directly 
     address the problem of confusion through enhanced disclosure, 
     not to do so through an entirely new regulatory approach that 
     purports to apply uniformly to financial professionals--when, 
     in practice, it does not.
       H.R. 2374 would build into the rulemaking process important 
     safeguards to ensure that the SEC adequately justifies any 
     rule prescribed to improve investor confusion and that it 
     appropriately tailors such a rule in a way that remedies the 
     identified problem, but does not adversely affect consumers 
     in the process of doing so. Specifically, the legislation 
     requires the SEC to identify, prior to any rulemaking, if: 
     current differences in the legal and regulatory obligations 
     of brokers, dealers, and investment advisers actually produce 
     harmful outcomes for retail customers--and--whether the 
     adoption of the ``uniform fiduciary duty'' as proposed by the 
     SEC could in fact have an adverse impact on consumers by 
     limiting access to investment advice, raising costs, and 
     adding to investor confusion.
       Should the SEC proceed with a rulemaking, H.R. 2374 would 
     require the SEC to publish alongside a proposed rule formal 
     findings that demonstrate how the rule would reduce investor 
     confusion. Finally, the legislation imposes a stay on the 
     promulgation of conduct regulations by the Department of 
     Labor (``DOL''), which is currently considering a rulemaking 
     that would redefine the term ``fiduciary'' for purposes of 
     the Employee Retirement Income Security Act of 1974 
     (``ERISA''). This provision would allow the SEC to freely 
     carry out the congressional objective underlying Section 913 
     of the Dodd-Frank Act \4\ without concern over any potential 
     interference from the DOL, which, through its anticipated 
     rulemaking, may or may not encroach upon marketplace activity 
     traditionally governed by the securities laws and overseen by 
     securities regulators.
       If enacted, H.R. 2374 will ensure a thorough fact finding 
     by the SEC and, if necessary, will result in regulation 
     targeted to address the problem originally contemplated by 
     Congress when it provided the SEC with this rulemaking 
     authority. We believe that such an outcome would greatly 
     benefit investors.
       Again, we thank you for introducing H.R. 2374 and we look 
     forward to working with you and your staff as the 113th 
     Congress continues.
           Sincerely,
                                                David J. Stertzer,
                                          Chief Executive Officer.
       \1\ The AALU is a nationwide organization comprised of more 
     than two thousand life insurance agents and professionals 
     primarily engaged in sales of life insurance used as part of 
     estate, charitable, retirement, and deferred compensation and 
     employee benefit services. The AALU is organized behind a 
     mission to promote, preserve and protect advanced life 
     insurance planning for the benefit of our members, their 
     clients, the industry and the general public.
       \2\ Pursuant to Section 913(g)(1) of the Dodd-Frank Wall 
     Street Reform and Consumer Protection Act (``Dodd-Frank 
     Act'').
       \3\ For additional information on the AALU's support of 
     H.R. 2374, see Legislative Proposals to Relieve the Red Tape 
     Burden on Investors and Job Creators: Hearing Before the H. 
     Subcomm. On Capital Mkts. and Gov't Sponsored Enters, of the 
     H. Comm. on Fin. Servs., 113th Cong. (2013) (statement of Ken 
     Ehinger, President and CEO, M Securities, Inc.), available at 
     http://financialservices.house.gov/UploadedFiles/HHRG-113-
BA16-WState-KEhinger20130523.pdf.
       \4\ Namely, an evaluation of the need for a new standard(s) 
     of conduct and harmonization of the regulation of brokers, 
     dealers, and investment advisers--and, if warranted by the 
     SEC's findings, the promulgation of rules to establish new 
     requirements.

[[Page H6860]]

     
                                  ____
                                      Independent Insurance Agents


                                    & Brokers of America, Inc.

                                               September 30, 2013.
     Hon. John Boehner,
     Speaker, House of Representatives, Washington, DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives, Washington, DC.
       Dear Speaker Boehner and Minority Leader Pelosi: On behalf 
     of the Independent Insurance Agents & Brokers of America 
     (IIABA or the Big ``I''), I write today in support of H.R. 
     2374, the ``Retail Investor Protection Act'' introduced Rep. 
     Ann Wagner (R-MO). With over a quarter of a million agents 
     and employees nationwide, the Big ``I'' is the largest 
     association of insurance producers in the United States.
       The IIABA is greatly concerned that agents, brokers and the 
     consumers they serve would be adversely affected by the 
     establishment of a universal fiduciary standard of care. An 
     expansion of the fiduciary duty promises to create undue 
     compliance burdens and increased liability for our small 
     business membership, thereby increasing costs for consumers 
     and restricting access to quality investment advice for those 
     most in need. Furthermore, simultaneous and possibly 
     overlapping rulemakings by the Department of Labor (DOL) and 
     the Securities and Exchange Commission (SEC) have the 
     potential to create confusion in the marketplace and even 
     more liability concerns for marketplace participants.
       Rep. Wagner's bill would create a number of important 
     checks and balances on the rulemaking process to ensure that 
     consumers are not harmed by an expansion of the fiduciary 
     duty. First, it would require the DOL to wait until 60 days 
     after the SEC finalizes any fiduciary rule before issuing its 
     rule. The measure would also require the SEC to determine 
     that any new mandate would not harm consumers or restrict 
     access to investment advice, and would require the completion 
     of a cost-benefit analysis.
       The IIABA thanks you for scheduling H.R. 2374 for 
     consideration this week and urges all members to support this 
     important legislation.
           Sincerely,
                                                Charles Symington,
     Senior V.P. of External & Government Affairs.
                                  ____



                                         United States Senate,

                                   Washington, DC, August 2, 2013.
     Hon. Sylvia Matthews Burwell,
     Director, Office of Management and Budget, Washington, DC.
       Dear Director Burwell: We write with regard to the work the 
     Securities Exchange Commission (SEC) is currently undertaking 
     to implement Section 913 of the Dodd-Frank Act, and its 
     intersection with the work the Department of Labor (DOL) is 
     currently engaged in to redefine the term ``fiduciary'' under 
     the Employee Retirement Income Security Act of 1974 (ERISA). 
     We remain very concerned that uncoordinated efforts 
     undertaken by the agencies could work at cross-purposes in a 
     way that could limit investor access to education and 
     increase costs for investors, most notably Main Street 
     investors.
       The fundamental purpose of Section 913 of the Dodd-Frank 
     Act is to provide for the establishment of a uniform 
     fiduciary standard that applies equally to Broker-Dealers and 
     Registered Investment Advisors for the benefit of investors 
     when personalized investment advice is provided. While it is 
     unclear what the Department of Labor's re-proposal in this 
     area will look like, the Department's 2010 proposal could 
     have caused all Broker-Dealers that service Individual 
     Retirement Accounts (IRAs) to be ERISA fiduciaries, which 
     would have as a practical matter eliminated access to 
     meaningful investment services for millions of IRA holders.
       We believe that Congress clearly intended that a single 
     standard should apply to retail accounts, including 
     retirement accounts, based on the specific guidelines 
     enumerated in Section 913. We are concerned that while the 
     SEC is proceeding in accordance with its Congressional 
     mandate, the DOL seems poised to issue a regulation that 
     could directly conflict with the SEC's work.
       Given the Office of Management and Budget's role in 
     coordinating and streamlining Agency regulations, we write to 
     make you aware of the potential conflict between these 
     regulations. We would also encourage you to promote 
     regulations that are workable and encourage, rather than 
     limit professional investment education and guidance. We 
     believe that, at a minimum, the Department of Labor should 
     not issue final regulations in this area until the SEC has 
     completed its work and that any regulation the DOL ultimately 
     may propose should be carefully crafted so that it does not 
     upend the SEC's work.
       We urge you to review any regulation proposed by the DOL to 
     be sure it does not undermine the SEC's implementation of a 
     fiduciary standard for the benefit of retail investors. We 
     know that you share our goal of ensuring that any regulations 
     issued in the area are consistent rather than working at 
     cross-purposes and we look forward to working with you in 
     furtherance of this goal.
           Sincerely,
     Jon Tester,
       United States Senator.
     Claire McCaskill,
       United States Senator.
     Tom Carper,
       United States Senator.
     Mark Begich,
       United States Senator.
     Ben Cardin,
       United States Senator.
     Mark Warner,
       United States Senator.
     Kay Hagan,
       United States Senator.
     Amy Klobuchar,
       United States Senator.
     Mark Pryor,
       United States Senator.
     Kirsten Gillibrand,
       United States Senator.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from 
Minnesota (Mr. Ellison), cochair of the Progressive Caucus, a member of 
the Financial Services Committee, and Democratic whip.
  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

[[Page H6861]]

     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.

  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Tennessee, Dr. Roe, a distinguished member of the Education and the 
Workforce Committee.
  Mr. ROE of Tennessee. I thank the chairman.
  Mr. Speaker, I rise in support of the Retail Investor Protection Act 
and preserving access to financial advice to all Americans.
  The Department of Labor's efforts to redefine the fiduciary standards 
is classic Washington. It is a solution in search of a problem. The DOL 
has yet to present tangible evidence--beyond anecdotes--that workers 
are being hurt by current law, nor has the Department conducted a 
sufficient cost-benefit analysis.
  This is not to say that the fiduciary standards must never be 
changed. All of us, Republicans and Democrats, want to strengthen 
workers' retirement security and perhaps need to modernize the 
longstanding fiduciary standard; but instead of working with Congress, 
the Department of Labor has single-mindedly pursued a course that would 
actually drive up the cost of retirement planning and restrict access 
to important investment advice. Millions of Americans could potentially 
be left to prepare for retirement on their own. How on Earth could this 
be a good thing?
  The 2007 recession wreaked havoc on the retirement savings of 
American workers. We should work together on responsible solutions that 
will help workers enjoy their retirement years with financial security 
and peace of mind.
  I am privileged to serve as chairman of the Subcommittee on Health, 
Employment, Labor, and Pensions, and that is precisely what we are 
trying to do in the area of multiemployer pension reform. The 
subcommittee has convened numerous bipartisan hearings to closely 
examine the problems plaguing the multiemployer pension system and 
potential solutions. In fact, we held such a hearing earlier today. 
Will we all agree on every point? Of course not. However, we remain 
committed to working together on real solutions that will promote the 
best interests of American families.
  I hope the Department of Labor will reconsider its ill-conceived 
approach to revising Federal fiduciary standards and work with 
Congress, interested stakeholders, and other Federal agencies to 
strengthen the retirement security of hardworking Americans. Until the 
Department does what is right and changes course, I urge my colleagues 
to support the Retail Investor Protection Act.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentlelady from New 
York (Mrs. Carolyn B. Maloney), who serves as the ranking member on the 
Subcommittee on Capital Markets and Government Sponsored Enterprises of 
the Financial Services Committee.
  Mrs. CAROLYN B. MALONEY of New York. I thank the ranking member for 
yielding and for all her hard work, and I thank the chairman.
  Mr. Speaker, I rise in opposition to H.R. 2374. The bill would 
require the Securities and Exchange Commission to conduct yet another 
cost-benefit analysis of a fiduciary duty rule, apparently in the 
attempt and hope of derailing a new fiduciary duty rule to protect 
consumers. The Securities and Exchange Commission has already completed 
a lengthy study on whether or not to propose a fiduciary duty rule for 
brokers. That study included an extensive cost-benefit analysis.
  So, my colleagues, outside of trying to derail a new consumer 
safeguard, what could possibly be the purpose of requiring the SEC to 
do yet another cost-benefit analysis on the exact same issue again? How 
about we just take the first one and make two copies?
  The rule also prohibits the Labor Department from even proposing a 
rule until 60 days after the SEC finalizes its final rule. And what is 
the harm, my colleagues, in allowing an agency--in this case, the Labor 
Department--to release the proposed rule for public discussion, for 
public input? Since when has Congress been afraid of a debate?

  If my colleagues believe that the proposed rule gets it wrong, then 
they have every opportunity to say so, as does the public, as do 
businesses, and that is exactly what the public comment period is for. 
That is what happened the last time the Labor Department proposed a 
fiduciary rule; there were questions raised. They have recalled it to 
reconsider it, and they are withdrawing that proposal and working on a 
new one.
  If the SEC has a better idea for a fiduciary duty rule, then let's 
debate that one and have that released, but preventing an agency from 
even putting out a regulatory proposal for public debate is flat-out 
dead wrong.
  This bill would delay and possibly derail important rulemaking at the 
Securities and Exchange Commission and the Labor Department to protect 
retirement security and investor protection rights. This is a 
transparent attempt to slow down the rulemaking process and possibly 
derail the whole rulemaking process for protections for consumers.
  For these reasons, I urge my colleagues to vote ``no.''
  Mr. HENSARLING. Mr. Speaker, I am now pleased to yield 3 minutes to 
the gentleman from New Jersey (Mr. Garrett), chairman of the Financial 
Services Subcommittee on Capital Markets and GSEs.
  Mr. GARRETT. Mr. Speaker, I thank the chairman for advancing this 
bill to the floor. I also congratulate the sponsor of the bill, Mrs. 
Wagner, for leading forward with a piece of legislation that has, at 
its heart, to work in a bipartisan manner to protect American investors 
big and small, senior citizens, and regular people across this country 
who are concerned about their investment, concerned about what they pay 
for their advice and for their transactions. So I commend both of them 
for moving this legislation along.
  The other side of the aisle likes to get engaged with name-calling, 
like ``shoddy,'' ``bad,'' ``rip-off,'' and throw out numbers which, I 
guess, are just sort of pulled out of the air when they say, If it is 1 
percent for this, how much over 30 years? If it is a commission of X, I 
don't know, how much is it over 40 years?
  I always wonder when I hear comments from the other side of the aisle 
if they really actually sit and read the bill or do they just pull 
these numbers out of a hat. But I did hear one of their comments which 
went to the point of trying to help investors, which is: How do we help 
Americans, and how do we do it in a bipartisan manner?
  Well, this was one of the most bipartisan bills that we have ever had 
coming out of our committee. Over half of the Democrats on the 
committee said they are going to stand with Americans, stand with 
investors. I will share some of those.
  Mr. Sherman voted ``yes''; Ms. Moore said ``yes,'' stand with 
Americans; Mr. Perlmutter said ``yes''; Mr. Himes said ``yes''; Mr. 
Peters said ``yes.'' Messrs. Carney, Foster, Kildee, Delaney, Mrs. 
Beatty, and Mr. Heck, to name just a few, joined with Republicans to 
work in a bipartisan manner to stand with Americans and stand with 
American investors, realizing that, at the end of the day, part of the 
problem in Washington is too many agencies that are not communicating 
with each other. Lack of communication is one of the problems that we 
have seen in this country in the last few weeks and months.
  All we are suggesting is that the various agencies, like the SEC and 
the Department of Labor, actually coordinate and work together for 
investors. How will they do that? Well, the SEC, is principally charged 
with the responsibility of looking at the areas of broker-dealers and 
investment advisers. And you know there is a difference on how they are 
treated right now, and there is a reason for that. They have been 
treated differently for eight decades, I guess, or so.
  The SEC will be looking at this. As the gentlelady from New York has 
indicated, there is a study outstanding right now. They are getting 
comments

[[Page H6862]]

in already for that study. We are saying let's make sure we hear all 
the information, collect all the data, and before we go forward, let's 
have communication between these two agencies.
  Let the SEC take the first step here. Nothing in here prevents them 
from taking any final actions or final steps. Nothing in this bill 
prevents the investor from being protected as these various agencies 
see fit.
  All we are really asking for is the SEC, the agency principally 
charged with this, to take the first action, make sure they have the 
data, then work in harmony with the Department of Labor, and at the end 
of the day, we will be helping the American investors in a completely 
bipartisan manner.

                              {time}  1530

  Ms. WATERS. Mr. Speaker, I yield 4 minutes to the gentleman from 
California, Congressman George Miller, who is the ranking member on the 
Committee on Education and the Workforce.
  (Mr. GEORGE MILLER of California asked and was given permission to 
revise and extend his remarks.)
  Mr. GEORGE MILLER of California. I thank the ranking member for all 
of her work on this legislation and for her yielding me the time.
  Mr. Speaker, I rise in opposition to H.R. 2374. This bill is very bad 
news for working families. It protects the loophole in the law that 
allows conflicted brokers and advisers to rip off ordinary Americans 
who are trying to save for their retirements.
  The 2008 financial crisis wiped out trillions of dollars of 
Americans' retirement accounts. Working families now need help in 
rebuilding those nest eggs, and they need better protection for their 
savings. The SEC and the Labor Department have moved to provide these 
protections, proposing to close the harmful loophole, but this bill 
would scuttle those efforts. Here is what is at stake.
  Millions of Americans are putting money aside every day in their 
401(k)s and in their IRAs to save for retirement. They have to make 
these investment choices, and Wall Street is more than happy to advise, 
but some of those advisers and brokers have conflicts of interest, 
often undisclosed conflicts of interest. The brokers know about their 
conflicts of interest, and the brokerage houses know about their 
conflicts of interest, but the person who is handing over his hard-
earned retirement funds doesn't know about the conflicts of interest. 
The workers think they can trust this investment advice.
  But what they don't know is that their advisers may get paid more 
for, in fact, in actual cases, steering them into high-cost funds with 
the worst performing of the family of funds. It is very good for the 
family of funds, but it is very bad for that individual worker who is 
now handing over his retirement nest egg. That product might have 
higher fees than other products. It might underperform compared to 
other products. In other words, the product is not in the worker's best 
interest, but it certainly is in the broker's best interest.
  The SEC and the Labor Department are trying to close this loophole 
that allows this rip-off to continue to happen, and it is, indeed, a 
rip-off of ordinary Americans. I know my friend from New Jersey doesn't 
like the term ``rip-off,'' but that is what is happening to these 
hardworking American families. Multiple studies--not conjecture--have 
found that these conflicts of interest cost these retirees, these 
workers, very real money.
  In 2009, the GAO found that, when a pension consultant has conflicts 
of interest, a defined benefit retirement plan underperforms by 130 
basis points. If a conflicted broker in the defined contribution world 
recommends funds at a similar rate of underperformance, a 40-year-old 
worker who rolls over his $20,000 401(k) balance into an IRA will see 
his retirement savings cut by a third over 30 years. If he normally 
earns 6 percent returns, he would now only be making a 4.7 percent 
return. The bottom line is he is $35,000 poorer by the time he reaches 
70. Thank you for that conflicted advice.
  This year, researchers found that the funds recommended by conflicted 
brokers in 401(k) plans underperformed by an average of 3.6 percent. 
That translates into workers losing $1 billion every month from their 
retirement funds because of these conflicts of interest. As a result, 
consumers are getting bad advice and are putting their retirement 
savings at stake.
  Where do those figures come from?
  They come from the founders of the Vanguard funds, who worked out the 
differences between these funds, conflicted funds, and other funds. 
That is why the Dodd-Frank law directs the SEC to transition brokers to 
a fiduciary standard, and, separately, the Department of Labor is 
trying to align the protections as well.
  Brokers need to either act solely in the best interests of investors 
or otherwise disclose who they work for and how they are paid, but some 
on Wall Street have cried out, claiming that they will not be able to 
offer investment advice, especially to working people, if they cannot 
offer conflicted advice. They can't tell you how to invest your money 
unless they can offer you conflicted advice wherein they are getting 
paid more to offer you a substandard product. With the knowledge of 
that and the higher fees, they somehow can't make money. Let's remember 
that 75 percent of the brokers can't beat the S&P 500 that is on 
automatic pilot.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. WATERS. I yield the gentleman an additional 1 minute.
  Mr. GEORGE MILLER of California. I thank the gentlewoman for 
yielding.
  Mr. Speaker, is that what they are really saying? Is that what 
American workers want to know--if I don't give you money, for which you 
can keep secret conflicts of interests that you have with the 
investment of my money, I have to give you my money anyway if I am 
looking for this investment? That is absolutely wrong.
  The American worker deserves better than that. These people work hard 
to make the decisions to try to save, to add to their 401(k)s, and you 
want to talk about, oh, we should educate them about the value of a 
401(k) and about the value of an IRA. You can educate them until the 
cows come home, but if they know that somebody is stealing their money 
because someone can conceal a conflict of interest, all of that 
education won't make a damned bit of difference because the fact of the 
matter is they've worked too hard to hand over their money to those 
conflicted advisers.
  That is what this bill is about. This bill would continue those 
conflicts, make every effort to delay and stop this rulemaking--or we 
change the law, we go forward, we protect working families, we protect 
the retirees, and we make sure that the financial marketplace is free 
of these conflicts of interest.
  Again, I thank the gentlewoman for all of her effort on this 
legislation.
  Mr. HENSARLING. Mr. Speaker, I am pleased now to yield 2 minutes to 
the gentleman from North Carolina (Mr. McHenry), the chairman of the 
Financial Services Subcommittee on Oversight and Investigations.
  Mr. McHENRY. I want to thank the committee chairman as well, Mr. 
Hensarling, for yielding to me, and I want to thank my colleague Ann 
Wagner from Missouri for putting together this very wise bill.
  Mr. Speaker, I would say to my Democrat colleagues on the other side 
of the aisle who are speaking out with loud voices that the only rip-
off here is when retail investors and the American people have two 
different government agencies writing rules. When they are not 
coordinating with each other and when they are not talking to one 
another, they are not writing rules that work together. In fact, you 
could be a retail investor and be complying with the Department of 
Labor's rules but could be running counter to the Securities and 
Exchange Commission's rules if this coordination is not done as 
required by this legislation.
  So the Retail Investor Protection Act is just that. It protects 
retail investors. It reconciles uncoordinated efforts between the 
Securities and Exchange Commission and the U.S. Department of Labor, 
and it says that they have to work together and also use a cost-benefit 
analysis when they are writing these rules.

  I think that is a very wise thing. In fact, the court system has 
agreed that it is a wise thing, and 44 members of the House Financial 
Services Committee thought it was a wise thing, while only 13 opposed 
passing this out.

[[Page H6863]]

Also, we have 10 Democrat United States Senators who have written to 
the Office of Management and Budget, making an identical request as 
this bill to the SEC, stating that the SEC act first in writing these 
rules before they come together.
  So, today, it is not only a bipartisan vote but also a bicameral 
vote, both the House and the Senate. I would ask my colleagues to 
support this bipartisan bill coming out of Financial Services in order 
to make sure that our government agencies actually coordinate when they 
write rules. Let's actually protect retail investors and do that first.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from 
Virginia, Mr. Bobby Scott, who is on the Judiciary Committee and who is 
the ranking member on its Subcommittee on Crime, Terrorism, Homeland 
Security, and Investigations.
  Mr. SCOTT of Virginia. I thank the gentlelady for yielding.
  Mr. Speaker, I rise in opposition to H.R. 2374, the so-called Retail 
Investor Protection Act. H.R. 2374 delays the Department of Labor's 
rulemaking process that would protect investors from unscrupulous 
investment scams.
  Now, in past generations, pension plans were what were called 
``defined benefit plans'' in which there were defined benefits. You 
would look at the number of years, your last salary, and the multiple, 
and you could calculate what your pension would be. But more and more 
we are seeing defined contribution plans in which the employer just 
makes a contribution, and the final benefit would be whatever happens 
to the money over the years with the investment advice that you would 
be given. The trend has had a profound impact on ultimate retirement 
benefits and security.
  Two people investing the same amount--for example, $100 a month over 
30 years--could see very different retirement savings over that same 
period of time based on the investments they chose. Those investment 
choices could be the difference between a savings at the end of 
$100,000 or as much as $500,000 depending on which strategies were 
used. Now, most employees are not sophisticated investors, and 
therefore they need advice on what investment strategies should be 
used. How much should be in stocks? how much in bonds? how much in 
mutual funds, and which mutual funds? They seek advice.
  The rule that the Department of Labor introduced in 2010 and will 
most likely reintroduce this fall simply requires that an investment 
adviser provide advice as a fiduciary responsibility to the investor, 
consistent, therefore, with the best interest of the investor, not with 
what would ultimately be most profitable to the adviser. That is, he 
has a duty to give primary consideration to the investor, not to his 
own profit. There are a lot of different products. A lot of mutual 
funds have extremely high fees when comparable funds--even better 
funds--have lower fees. Often the adviser will push products that are 
totally inappropriate for the investor, which is compromising the 
investor's retirement security in the long run but which is maximizing 
the profits for the adviser.
  The bill we are considering today will allow investments to be sold 
which are laden with conflicts of interest and would immunize advisers 
who give self-serving, unscrupulous advice from any liability. There is 
an apparent belief that investment advice that is self-serving and full 
of conflicts of interest is better than no investment advice at all. 
That is absolutely absurd. There is nothing wrong with those selling 
investment products to be required to give primary consideration to the 
investors they are purporting to advise.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Ms. WATERS. I yield the gentleman an additional 1 minute.
  Mr. SCOTT of Virginia. Mr. Speaker, the bill that we are considering 
today would delay the rulemaking that would take the necessary steps to 
protect employees and retirees who are currently being taken advantage 
of by investment advisers who are giving this unscrupulous advice.
  Millions of Americans look to financial advisers for advice. There is 
nothing wrong with requiring them to have a fiduciary responsibility to 
those they are advising. It is about time that we make sure the 
investors are getting the good advice that they deserve. Therefore, we 
should defeat this bill.
  Mr. HENSARLING. Mr. Speaker, I now yield 2 minutes to the gentleman 
from Virginia (Mr. Hurt), the vice chairman of the Financial Services 
Subcommittee on Capital Markets and GSEs.
  Mr. HURT. Thank you to the chairman of this committee, and thank you 
to the sponsor for your leadership on this issue.
  Mr. Speaker, I rise today in support of the Retail Investor 
Protection Act.
  Fifth District Virginians and Americans across the country are 
working hard to save for their futures, whether it be for their 
retirements or college tuitions for their children. Unfortunately, 
these hardworking Americans are being faced with the prospect of 
increased costs and fewer choices for the financial products that they 
currently rely on for their investments.
  Currently, the Department of Labor and the Securities and Exchange 
Commission have indicated they will move forward with rulemakings to 
make changes to the fiduciary standards that would decrease the 
availability of financial advice for retail investors and increase the 
cost of financial advice for retail investors.
  We must protect the ability of these Americans to choose the 
financial professionals who best meet their investment needs, and this 
bill is an important step in that direction. The Retail Investor 
Protection Act ensures that retail investors, including many American 
families, are not affected by unnecessary regulations that have been 
put in place without sufficient economic analysis or regulatory 
coordination.
  I urge my colleagues to join me in supporting this important bill so 
that Washington does not stand in the way of Americans' ability to seek 
the best financial advice for their needs.
  Ms. WATERS. Mr. Speaker, I yield 3 minutes to the gentleman from New 
Jersey (Mr. Andrews), who is an expert on retirement savings. He is the 
ranking member on the Education and the Workforce Subcommittee on 
Health, Employment, Labor, and Pensions. He is also the cochair of the 
Steering and Policy Committee.
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. I thank my very good friend for yielding.
  Mr. Speaker, so you are in the lunchroom at work. This guy comes in 
from the investment house, and he shows 18 slides about the red fund--
smiling people who are on fishing trips and on European vacations. They 
are really happy people.

                              {time}  1545

  He shows one slide about the blue fund at the very end and finishes 
his presentation. The red fund looks pretty good. What he doesn't tell 
you is that he gets 2\1/2\ percent of every dollar you put into the red 
fund, but \1/2\ of 1 percent of every dollar you put in the blue fund. 
He neglects to mention that. So people rush and put their money in the 
red fund.
  Now, should his interest be aligned with you or should his interest 
be aligned with his own interest? That is the question that is raised 
by this bill.
  The Department of Labor is writing a rule that for the first time 
would say that that person standing in front of you in that room has a 
fiduciary obligation to the person listening, that is to say that he 
has to put the interest of the listener ahead of his own financial 
interest.
  Self-interest is the malignancy that brought the U.S. economy to its 
knees 5 years ago. People who made mortgage transactions and insurance 
transactions benefited them and not the people they are supposed to be 
representing. To permit the cancer of self-interest to invade the 
second most important asset people have in their lifetime, which is 
their pension, would be an enormous mistake. That is a mistake that 
this Department of Labor rule is trying to avoid. This bill is a 
mistake because it rolls back those efforts and protections for the 
American people.
  John Bogle, the founder and patron of Vanguard, has estimated that 
nearly 30 percent of people's pension funds have evaporated because of 
unnecessary fees. If people want to choose a high-fee plan, that is 
their choice; but

[[Page H6864]]

they should make that choice only after receiving the advice that is 
fiduciary, that is directed to their own best interest, from a 
competent professional.
  The Department of Labor rule promotes that result; this bill 
undercuts that result. For that reason, we should oppose this bill.
  Mr. HENSARLING. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Luetkemeyer), another distinguished member of the 
Financial Services Committee.
  Mr. LUETKEMEYER. Mr. Speaker, I would like to thank Chairman 
Hensarling for all his fine work on this issue, as well as other 
financial services issues.
  I also would like to thank my good friend and neighbor in Missouri, 
Mrs. Wagner, for introducing this legislation and all her hard work on 
it. What she is trying to do here is propose legislation that tries to 
solve a problem that we have got in the situation here with these two 
agencies--DOL and SEC--trying to coordinate and propose a regulation 
which they don't seem to be willing to do or do it in the right way.
  As usual, when the bureaucracy tries to propose things, there always 
are unintended consequences of those actions and those rulings. We have 
here some of those unintended consequences, which Mrs. Wagner in her 
legislation is trying to mitigate.
  This proposal has the potential to drive up the cost and availability 
of investment services and products for investors, particularly those 
with low and moderate incomes. I will give you an example. I recently 
spoke to a broker-dealer in rural Missouri who I represent, who is one 
of only a handful of small brokers in a two-county radius. If the 
Department of Labor rule moves forward, he, like many other small 
broker-dealers, will have no choice, because of the way this rule is 
written or being proposed, that they will stop offering his services to 
clients, and many Missourians are going to be without or have limited 
access to financial products and advice.
  This hurts not only the big investors, but this hurts the small 
investors. As I said earlier, you are talking about the low- and 
moderate-income folks and, particularly, one of the most basic 
investments that we have, which is the IRA. How basic can you get to 
not allow people to be able to utilize an IRA if this goes into force?
  So it is important today that we take this action. I, again, thank 
the gentlelady from Missouri for her efforts, and I urge my colleagues 
for support.
  Ms. WATERS. Mr. Speaker, I would like to inquire as to how much time 
we have remaining on this side.
  The SPEAKER pro tempore. The gentlewoman from California has 5\1/2\ 
minutes remaining. The gentleman from Texas has 5 minutes remaining.
  Ms. WATERS. I am prepared to close. However, I will reserve the 
balance of my time if the chairman has other Members that he would like 
to put forth at this time.
  Mr. HENSARLING. We have one more speaker, and then we would allow the 
gentlelady to close.
  Then I believe I have the right to close, Mr. Speaker. Is that 
correct?
  The SPEAKER pro tempore. The gentleman is correct.
  Mr. HENSARLING. At this time, Mr. Speaker, I yield 2 minutes to the 
gentleman from South Carolina (Mr. Mulvaney).
  Mr. MULVANEY. Mr. Speaker, I have been sitting here for the past 45-
50 minutes watching the debate. It strikes me that with all of the 
financial terms and with some of the heated rhetoric--and it has been 
heated--I never thought I would see the day where enlightened self-
interest was called a cancer in this Nation. I wonder what Alexis de 
Tocqueville would think about that. But in any event, with all of that, 
Mr. Speaker, it strikes me that we have lost sight of what we are 
talking about. We are talking about a bill, what the bill specifically 
does, and why.
  Let's talk first about why we are here. We have a situation where 
Dodd-Frank has given authority to the SEC to make some rules. The 
Department of Labor also thinks it has the authority to make rules in 
the same area.
  I hope we can all agree that there is a potential for conflict there. 
We all know what it is. We have seen it a hundred times before. We 
don't want the SEC to come out and say that you can't do X and have the 
Department of Labor come out the next week and say, but you have to do 
X.
  There are hundreds of examples like that in the Federal Government, 
and this bill is simply trying to address that. How is it trying to do 
that? What does the bill do?
  Number one, it asks the two agencies to work together. Someone please 
tell me how that is a bad thing--and a cancer of all things--on this 
Nation.
  It then requires the two agencies to actually try and figure out if 
there is a problem--to ask them to identify a problem before they come 
up with a solution. Again, I think this makes a good bit of sense. The 
questions that we require them to ask in this bill are pretty simple: 
Are investors being systematically harmed? Would new rules limit 
people's access to investment advice? What are the costs and benefits 
of the rule?
  How is this controversial? And I would suggest to you, Mr. Speaker, 
that it is not. That is the reason that it came out of committee on a 
bipartisan basis, the reason it is going to pass today on a bipartisan 
basis, and the reason that it has the bipartisan basis that it does in 
the Senate.
  Too often I think we get sidetracked by coming in here and giving big 
speeches, and perhaps sometimes I am as guilty of that as anybody else. 
But today we have completely lost sight of why we are here. I hope we 
can come together and pass this bill this afternoon.
  Ms. WATERS. I yield myself such time as I may consume.
  Mr. Speaker and Members, H.R. 2374 is yet another attempt by 
Republicans to prevent our regulators from doing their job, this time 
protecting the average retail investor when they try to save for 
retirement.
  Under this bill, the Securities and Exchange Commission would have to 
navigate new obstacles to harmonize the standard of care broker-dealers 
and investment advisers have when providing investment advice. The 
Department of Labor would have to wait possibly forever to update its 
rules protecting 401(k) and IRA plan participants.
  H.R. 2374's restrictions put additional work in the way, stopping 
brokers from SEP dealing when selling investment products to Main 
Street.
  Several studies have demonstrated that Americans do not understand 
that a broker does not necessarily have the investor's best interest 
when pushing financial products. The line between advisers and brokers 
has blurred over the last few decades, and this bill makes it harder to 
bring clarity for investments.
  Mr. Speaker and Members, this administration has taken a strong stand 
against this bill. Let me read to you from the letter that they have 
sent to us, and I would like to offer this for the Record:

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

  They further say:

       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.

  Of course, there is a lot said here, but I think this says it all:

       The bill would hinder efforts to protect consumers from 
     conflicts of interest among brokers, dealers, financial 
     advisers, 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.

  Mr. Speaker and Members, I would just bring this to your attention: 
the Department of Labor is working to protect investors. My friends on 
the opposite side of the aisle are working to protect broker-dealers 
who may not have the best interest of these small individuals who want 
to invest, who want to earn money for retirement.
  My friends on the opposite side of the aisle are putting all of this 
energy out to protect them no matter if they may be in a conflict of 
interest with those

[[Page H6865]]

who are simply trying to save for retirement.
  I have watched as we have been through the subprime meltdown in this 
country. People lose money in their 401(k)s. I have watched people lose 
money in their IRAs. I have watched single women in their 60s losing 
their entire investment retirement savings who can't go back to work 
because they are too old--they can't find a job.
  Whose side are we on? Are we on the side of broker-dealers who will 
have no fiduciary responsibility, who can tell you any old thing, 
direct you any old place? They get higher commissions and the people 
lose money. Whose side are we on? Why are we here in the Congress of 
the United States of America, voted on by our constituents to come here 
to advocate for their best interest?
  The gentlelady from Missouri talked about what a hard time families 
are having. She is right. Families are having a hard time. I want to 
tell you, families are having a hard time even when my friends on the 
opposite side of the aisle would deny them food stamps when they lose 
their jobs, even when they stand here in the Congress of the United 
States and support sequestration that denied that family the ability to 
send their child to Head Start. They don't have money for fancy early 
childhood education. Head Start is all they have, but they are losing 
the ability to do that because my friends on the opposite side of the 
aisle support cutting back every agency.
  My friends on the opposite side of the aisle can't care about 
families in the way that they say they do because they shut down this 
government and they caused families to lose money to stay at home, to 
not know when they were going to get paid, or how to pay their bills. 
Not only did they harm these families; they harmed many of our agencies 
that are trying to help the families. I could go on and on and on.
  But let me say that consumer protection is advocated by some 
organizations we are all familiar with: AARP, AAUW, AFL-CIO, AFSCME, 
Alliance for Retired Americans, Americans for Financial Reform, the 
Association of BellTell Retirees, on and on and on. These are the 
people who protect consumers.
  I will submit this for the Record.
  I yield back the balance of my time.

         Executive Office of the President, Office of Management 
           and Budget,
                                 Washington, DC, October 28, 2013.

                   Statement of Administration Policy


               H.R. 2374--Retail Investor Protection Act

               (Rep. Wagner, R-MO, and Rep. Murphy, D-FL)

       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.

                   Groups in Opposition to H.R. 2374

       1. AARP
       2. AAUW
       3. AFL-CIO
       4. AFSCME
       5. Alliance For Retired Americans
       6. Americans for Financial Reform (AFR)-w/over 200 
     signatories
       7. The Association of BellTell Retirees, Inc.
       8. Certified Financial Planner Board (CFP)
       9. Consumer Federation of America
       10. Financial Planning Association
       11. Fund Democracy
       12. Investment Advisor Association (IAA)
       13. National Council of La RAZA
       14. The National Association of Personal Financial Advisors 
     (NAPFA)
       15. The National Association of Professional Geriatric Care 
     Managers
       16. North American Securities Administrators Association 
     (NASAA)
       17. OWL-The Voice of Midlife and Older Women
       18. Pensions Rights Center
       19. ProtectSeniors.org
       20. Public Citizen
       21. Wider Opportunities for Women

  Mr. HENSARLING. I yield myself such time as I may consume.
  Mr. Speaker, I must admit in the time that I have served as a Member 
of Congress, I have noticed the more shrill the debate the less 
defensible the position. As I have listened closely to what appears to 
be a very shrill debate, it certainly buttresses that position.
  I hear my friends talk about us on the other side of the aisle. I 
have heard the phrase ``my friends on the other side of the aisle'' 
consistently. But I would say perhaps the debate has to be between my 
friends on that side of the aisle, since the ranking member well knows 
that half--half--of her caucus on the Financial Services Committee 
supported this bill by the gentlelady of Missouri. As was pointed out 
earlier, it is not only bipartisan; it is also bicameral.
  I am sitting here, Mr. Speaker, with a letter signed by no fewer than 
10--10 Democratic Senators imploring that the very same provisions of 
the Wagner bill be enforced: Jon Tester, Mark Warner, Claire McCaskill, 
Kay Hagan, and the list goes on and on. I would say to my friends on 
that side of the aisle, perhaps they ought to finish the debate amongst 
themselves before they carry it on over here.
  Then, again, we all know that people are entitled to their own 
opinions; they are not entitled to their own facts. There have been a 
number of misstatements of facts from my friends on that side of the 
aisle, particularly that broker-dealers have no standard whatsoever in 
disclosing conflicts of interest; but that is not true. Within the 
antifraud provisions, sections 9, 10, 15(c)(1) and (2), it prohibits 
misstatements, misleading omissions of material facts; and, indeed, 
broker-dealers must fully disclose any conflicts of interest, yet 
another huge section of debate that was totally misleading and false by 
friends on that side of the aisle.

                              {time}  1600

  And I must admit, it is a very disappointing debate; but, it is in 
some respects illuminating to see the cynical position of those who 
simply believe that everyone appears to be a crook unless you are a 
government worker. The phrase ``cancer of self-interest'' is working 
mothers have a self-interest to invest in their children's education. 
If the guy at the Pepsi bottling plant that I represent is trying to 
invest so he can buy a home and put a roof over his family's head, that 
is the cancer of self-interest?
  All we are trying to do here is preserve investment advice and 
investment opportunities for working Americans, and I would encourage 
all Members, all Members of this body, to vote for the Wagner bill.
  I yield back the balance of my time.
  Mr. CRENSHAW. Mr. Speaker, as the Chairman of the Appropriations 
Subcommittee on Financial Services and General Government, my 
Subcommittee directly oversees the Securities and Exchange Commission's 
budget. And since 2001 the SEC's budget has increased by over 200 
percent . . . this is a larger increase than almost any other agency in 
our government.
   As the agency tasked with protecting investors and ensuring fair and 
orderly capital markets, you would think they would carefully 
coordinate with all agencies involved to ensure much needed certainty 
and to provide clear guidance to a trillion dollar industry. However, 
this again is not the case and we are here today to ensure that the SEC 
and the Department of Labor coordinate and work in a systematic manner 
to avoid investor confusion, regulatory conflict, and decrease costs 
for retail investors.
   This is why I rise today to put my support for H.R. 2374, the 
``Retail Investor Protection Act.''--common sense legislation, 
requiring the

[[Page H6866]]

SEC complete a rulemaking on standards of care governing broker dealers 
and investment advisers before the Department of Labor finalizes their 
rule redefining the definition of a person providing investment advice 
under the Employee Retirement Income Security Act. Plain and simple, 
ensuring collaboration between the two agencies that are trying to 
reach the same goal.
   In addition H.R. 2374 requires that before the SEC writes one new 
rules on expanding fiduciary standards, they need to identify whether 
investors are being harmed under current standards of care. We all need 
to remember what's at stake here. American families invest trillions of 
dollars in IRAs and through mutual funds, stocks, and bonds. The Retail 
Investor Protection Act will ensure that federal regulators will not 
lose focus on the impact these rules could have on retail investors and 
must consider all other options first, before moving forward with broad 
new regulatory mandates.
   The lack of regulatory coordination between these two financial 
regulators does not provide a cohesive landscape for investors and will 
be difficult for service providers to follow. These rules affect the 
lives of many and have profound and far reaching effects on our 
economy. The SEC itself has acknowledged that the costs of this action 
could ``ultimately be passed on to retail investors in the form of 
higher fees or lost access to services and products.
   We in Congress have an obligation to amend or fix provisions whose 
costs outweigh purported benefits. Therefore, as we move forward with 
the fiscal year 2014 budget in my Appropriations Subcommittee I plan to 
address with Chairwoman White whether a more thorough economic analysis 
of these rules are needed to ensure the SEC does not harm families who 
are investing to build up their retirement or to save for college--the 
very investors the SEC is supposed to protect. I urge my colleagues to 
vote in favor of H.R. 2374.
  Mr. VAN HOLLEN. Mr. Speaker, I am an advocate for consumer choice and 
appreciate the value of a variety of different business models in a 
competitive financial services marketplace. I also support full 
transparency regarding compensation arrangements and believe investors 
have a right to recommendations based on their best interests when 
receiving investment advice from financial services professionals.
  Consistent with these principles, the Securities and Exchange 
Commission (SEC) and the Department of Labor (DOL) are currently in the 
process of coordinating a harmonized ``fiduciary'' standard of care for 
financial services professionals offering investment advice to their 
clients. Rather than allowing the SEC and the DOL to complete their 
work, today's legislation would prejudge the outcome of the ongoing 
rulemakings and have the practical effect of delaying implementation of 
final harmonized rules to protect consumers' retirement savings from 
conflict of interests and potentially deceptive or abusive practices.
  Accordingly, I urge a ``no'' vote.
  The SPEAKER pro tempore. All time for debate on the bill has expired.


          Amendment Offered by Mr. George Miller of California

  Mr. GEORGE MILLER of California. Mr. Speaker, I have an amendment at 
the desk.
  The SPEAKER pro tempore. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 1, line 5, strike ``After'' and insert ``(a) In 
     General.--Except as provided in subsection (b), after''.
       Page 1, after line 14, insert the following:
       (b) Exception.--
       (1) In general.--The Secretary of Labor may issue a rule 
     that--
       (A) establishes standards of care to improve investment 
     advice provided to participants and beneficiaries under the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1001 et seq.);
       (B) requires that personalized investment advice is 
     provided in a fiduciary capacity that is in the best 
     interests of such participants and beneficiaries;
       (C) requires that, before receiving investment advice, the 
     compensation of investment advisors and financial service 
     providers is clearly disclosed to such participants and 
     beneficiaries; and
       (D) satisfies the requirements of paragraph (3).
       (2) Process.--The Secretary of Labor may issue a rule 
     pursuant to paragraph (1)--
       (A) after coordination and consultation with the Securities 
     and Exchange Commission; and
       (B) after considering surveys and data on investment 
     education and investment advice.
       (3) Participant investment education; appraisals.--The rule 
     issued pursuant to paragraph (1) shall provide standards of 
     conduct for--
       (A) participant investment education;
       (B) access to reliable investment education and investment 
     advice to traditionally underserved communities;
       (C) reasonable compensation for investment advisors and 
     financial service providers; and
       (D) fair market value appraisals of stock held by employee 
     stock ownership plans to employers, participants, and 
     beneficiaries under the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1001 et seq.).
       At the end of the bill, insert the following:

     SEC. 4. REPORTS ON THE IMPACT OF PRACTICES OF PERSONS WHO 
                   PROVIDE INVESTMENT ADVICE.

       (a) In General.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary of Labor shall report to 
     Congress on how certain practices of persons who provide 
     investment advice affect the standard of care exercised in 
     relation to investors.
       (b) Report Requirements.--Such report shall--
       (1) describe how the structure of compensation for persons 
     who provide investment advice affects the standard of care 
     exercised by such persons, including--
       (A) practices involving fees paid from investment vehicles 
     to such persons; and
       (B) other forms of compensation paid to such persons that 
     are not dependent upon the investor's return;
       (2) compare the standards of care exercised by persons who 
     provide investment advice to low-income and middle-class 
     investors with the standards of care exercised by persons who 
     provide investment advice to high-income investors, and the 
     effect such standards of care have on the investment vehicles 
     selected by investors; and
       (3) evaluate the extent to which the standard of care used 
     by persons who provide investment advice affects the adequacy 
     of investment returns to provide for retirement for 
     investors.

  The SPEAKER pro tempore. Pursuant to House Resolution 391, the 
gentleman from California (Mr. George Miller) and a Member opposed each 
will control 10 minutes.
  The Chair recognizes the gentleman from California.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 3 
minutes.
  Mr. Speaker, the amendment that I am offering along with Mr. Conyers 
is the way H.R. 2374 should have been drafted. Instead of short-
circuiting the regulatory process on behalf of Wall Street profits, 
this represents the appropriate and balanced way forward to advise the 
Department of Labor in their current rulemaking on investment advice.
  First, Congress should not be in the business of shutting down any 
and all efforts by the Department of Labor to make rules for 
fiduciaries. The fiduciary rule is the cornerstone of pension law. It 
is what makes sure that, when you hand your money over to someone else 
to invest it for you, they are going to act in your best interest. 
Stopping any and all regulatory action to ensure that people's 
retirement nest eggs are protected is irresponsible. My amendment would 
allow the Department to proceed.
  At the same time, it addresses concerns that have been raised with 
the Department of Labor's proposed rules. Under my amendment, Congress 
would send a message to the Department of Labor that we want investors 
protected, not Wall Street brokers or advisers trying to protect their 
gravy train.
  This amendment makes it clear that the Department may proceed with 
better protections for retirement investors in a way that provides for 
unbiased investment education, ensures that underserved communities are 
not unduly harmed by basic financial protections for investors, ensures 
reasonable competition to advisers, and protects employee stock 
ownership plan appraisals.
  We want investment advice to be provided in consumers' best 
interests, not in whatever way makes advisers and brokers the most 
money.
  Studies show that most Americans who save think their investment 
advisers are acting in their best interests. In fact, AARP found that 
overwhelming majorities of consumers thought all advisers were required 
to act in their best interests. But, in fact, they are not, under the 
current law. They are not required to disclose that they have a 
conflict of interest.
  With poll after poll showing that most Americans are worried about 
their retirement, they should have the confidence that their investment 
adviser is working in their best interest, and not conflicted in the 
advice he gives that person because he may receive additional fees or 
higher commissions because of recommending a product that is not in 
their best interest.
  This amendment is a no-brainer. It supports consumers and their 
retirement savings. It supports unbiased investment education. It 
supports reasonable compensation for advisers for

[[Page H6867]]

the important duties they perform. This is a proper and balanced way 
forward. I urge my colleagues to support the Miller-Conyers amendment.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Speaker, I rise in opposition to this amendment.
  The SPEAKER pro tempore. The gentleman from Texas is recognized for 
10 minutes.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  Again, I urge opposition to this amendment which would absolutely 
eviscerate this bill that we are considering now from the gentlelady 
from Missouri.
  Number one, we have speaker after speaker who come up and seem to 
ignore the fact that broker-dealers already are subject to a 
suitability standard, including antifraud provisions that prohibit 
misstatements, misleading omissions of material facts, and fraudulent 
and manipulative acts and practices in connection with the purchase and 
sale of securities. They have a duty of fair dealing, which include the 
duty to execute orders promptly, disclose certain material information 
that the customer would consider important as an investor, charge 
prices reasonably related to the prevailing market, and fully disclose 
any conflict of interest.
  I could go on and on.
  The proponents of this amendment, as speakers before them, seemed to 
ignore this set of facts. And so again, it is interesting to me how the 
American people are demanding that their Congress work on a bipartisan 
basis; and so out of our committee, the Financial Services Committee, 
we have gone above and beyond the call of duty, and now we have a bill 
that has been supported by half of the Democratic members of the 
Financial Services Committee. And I just read a letter where 10 
Democratic U.S. Senators are urging the exact same language as the 
Wagner bill and, thus, oppose the Miller amendment.
  So, again, Mr. Speaker, I urge the proponent of the amendment to 
first have the debate with his own Caucus, and then we can have a 
fuller, richer debate on the floor.
  What is really happening here is that all we are doing is saying to 
the Securities and Exchange Commission and the Department of Labor that 
this is an economy that is being crushed--crushed--by a red tape 
burden, that at least justify it. Make sure that the person you claimed 
you are going to protect, that you actually protect; and instead, we, 
quite honestly, fear they will not be protected, that instead they will 
be harmed, that all of a sudden, people who have access to $7 trades 
won't have access to them.
  Now, again, for the affluent, that is no big deal, but for working 
mothers struggling to make ends meet, it is a very big deal.
  To be denied the opportunity to open up an IRA with $2,000? No, I 
think now Congress has deigned that the Department of Labor can 
institute a fiduciary standard, and now you are going to need $25,000. 
Well, what the heck, let's make it $50,000. And so the very people they 
claim they want to protect very well could be harmed by this standard.
  We understand the talk, but where is the proof? Where is the proof? 
Because what is going to happen if this fiduciary standard is imposed? 
All of a sudden investment advice that working Americans count on is 
either going to disappear or become far more expensive.
  So, again, maybe it helps the trial lawyer; maybe it helps the labor 
union bosses; but it doesn't help the working mothers. It doesn't help 
the struggling fathers. It doesn't help low- and moderate-income people 
struggling in this economy where tens of millions remain underemployed 
and unemployed under this administration's economic policies, and so I 
urge that we reject this amendment.
  I reserve the balance of my time.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield myself 15 
seconds.
  I just want to say that it is an interesting concept that the only 
way the investment community can continue to survive and offer advice 
is if they can have the right to have conflicted advice--conflicted 
advice--be protected by the law, as opposed to representing the person 
that they are taking the money from to invest.
  I now yield 3 minutes to the gentleman from Michigan (Mr. Conyers), 
coauthor of the amendment.
  Mr. CONYERS. Mr. Speaker, I want to thank George Miller for the work 
he has done, along with the ranking member of the Financial Services 
Committee.
  The Miller-Conyers amendment simply encourages the Department of 
Labor to issue a rule that requires investment advisers to provide 
advice in a fiduciary capacity and protect access to investment 
education, ensure reasonable compensation to advisers, and ensure the 
availability of ESOP appraisals.
  This is what we are seeking so badly, and this is the comment that 
has been made about the inaccurate drafting of the bill. The Department 
of Labor should issue a proposed rule that seeks to protect workers, 
provide access to investment education, and ensure that advisers are 
reasonably paid.
  Under current rules, investment advisers may hold themselves out as 
acting in workers' best interests even though they are not. I repeat: 
under current rules, investment advisers may hold themselves out as 
acting in workers' best interests even though they are not.
  Workers in these types of plans often are required to choose between 
dozens of investment choices and need the advice on their investment 
options from people who do not have secret conflicts. Over 70 million 
workers and retirees depend upon 401(k) retirement plans and IRAs for 
their retirement savings. If there is any hope for this measure at all, 
H.R. 2374, it would have to have this amendment on it. I plead with 
those who enthusiastically support this measure to please support this 
amendment.
  Mr. HENSARLING. Mr. Speaker, I am now pleased to yield 3 minutes to 
the gentlewoman from Missouri (Mrs. Wagner), the author of the Retail 
Investor Protection Act.
  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.
  Mr. GEORGE MILLER of California. Mr. Speaker, I yield 3 minutes to 
the gentleman from New Jersey (Mr. Andrews).
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. I thank my friend for yielding.
  Mr. Speaker, my friend, the chairman from Texas, asked, I think, a 
couple of very important questions about this amendment, and he really 
points out why I support it. First, he asked: Where is the proof that 
American pensioners have suffered because of conflicted investment 
advice?

[[Page H6868]]

                              {time}  1615

  Mr. Speaker, we can all look to the Government Accountability Office, 
which looked at that very question a few years ago, at Mr. Miller's 
request and mine and several others, and found that upwards of 27 
percent of people's accounts evaporated because of high fees in plans 
in which they put their money in defined contribution accounts. That is 
pretty significant proof.
  As I said earlier on the floor, they could look to the opinion of 
someone who is not political at all, I think, someone who is an expert 
in this field, Jack Bogle, from Vanguard, who uses the number 30 
percent in unnecessary fees that have gone up here. Proof is ample that 
many Americans have rather paltry retirement accounts because of the 
very high fees that they are paying.
  Second, Mr. Speaker, the chairman talked about the suitability 
standard under the securities law. That is kind of the point. The 
suitability standard is not a fiduciary standard. The suitability 
standard assumes an arm's-length transaction between people of equal or 
similar competence, where it is every investor for him- or herself.
  The pension situation is very different. This is a situation where 
someone is driving a bus or building houses or teaching school or 
working in a software company, and that is what they do. They don't do 
investment all the time. So when they turn to someone for advice, they 
are assuming that that someone is on their side, that the advice that 
someone is giving them is in their best interests. That is the very 
nature of a fiduciary relationship.
  So I think the questions that were raised point out the reasons to 
support Mr. Miller's amendment. There is ample evidence of harm that 
has been done to America's investors; and, secondly, the suitability 
standard is wholly insufficient to protect the interests of those 
investors.
  For those reasons, I urge a ``yes'' vote on this amendment, and a 
``no'' vote on the bill.
  Mr. HENSARLING. Mr. Speaker, may I inquire as to how much time each 
side has remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 4 minutes 
remaining, and the gentleman from California has 1\3/4\ minutes 
remaining.
  Mr. HENSARLING. Mr. Speaker, I yield 1 minute to the gentleman from 
New Jersey (Mr. Garrett).
  Mr. GARRETT. Mr. Speaker, I thank the chairman for yielding me time.
  How you ended your comments was, Let's move this bipartisan amendment 
to this bill, and what I was trying to do in a bipartisan manner was to 
ask the question: Is simply what you are trying to do is to require 
that investment advisers, that they would have to have, you are saying, 
a fiduciary duty going forward? That is what you are trying to do to 
add to this bill? I heard you say that, and I heard Mr. Miller say 
that. That was my question to you.
  You said it once. Mr. Miller said it twice. I made a note of it each 
time. That is my question. That is what you basically want us to do. 
You want us to make it the law that an investment adviser would have to 
have a fiduciary standard to do in the best interest, if you will?
  Mr. GEORGE MILLER of California. Will the gentleman yield?
  Mr. GARRETT. I yield to the gentleman.
  Mr. GEORGE MILLER of California. Do I believe that advisers have a 
fiduciary relationship to the people that they are taking money from to 
invest? I do. I think the law should reflect that, absolutely.
  Mr. GARRETT. Earlier I said that I often wonder whether people who 
come to the floor to oppose some of our bills ever actually read the 
bill.
  The SPEAKER pro tempore. The time of the gentleman has expired.
  Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
  Mr. GARRETT. Now I am going to go a step further. I wonder whether 
the people who oppose this bill actually know what the law is.
  The law is and has been for decades that, if you are an investment 
adviser, you already have a fiduciary standard with regard to your 
client. That is the current law. Already the investment adviser, going 
through an ERISA plan, has a fiduciary standard. I think what you are 
talking about is a broker-dealer.
  Mr. GEORGE MILLER of California. Will the gentleman yield?
  Mr. GARRETT. I yield to the gentleman.
  Mr. GEORGE MILLER of California. That is what the amendment 
addresses.
  Mr. GARRETT. Exactly. That is why I asked both of you twice what you 
said. What you said on the floor and what you just said a moment ago 
is, you were talking about broker-dealers, but you said it was 
investment advisers. It just points out, Mr. Speaker, that they come to 
the floor with absolutely no understanding of what the law is.
  Once again, we encourage the bill to go unamended.
  The SPEAKER pro tempore. Members are again reminded to direct their 
remarks to the Chair.
  Mr. GEORGE MILLER of California. Mr. Speaker, does the gentleman from 
Texas have additional speakers?
  Mr. HENSARLING. I have no further speakers, Mr. Speaker, and I 
believe I have the right to close.
  Mr. GEORGE MILLER of California. Mr. Speaker, let me get this 
straight. You can talk about the advisers having a fiduciary 
responsibility and obligation under the law, but then you can have the 
broker-dealers come in and close the deal, and they can provide 
conflicted advice and, in fact, conflicted products--in the best 
interest of this retired individual who is trying to invest their 
funds? Very clever.
  But this comes from an industry where we saw the banks sell a tranche 
of mortgages to their best friends and customers and then immediately 
bid against the success of that tranche of mortgages. So conflicted 
advice can be very profitable. They worked it to a fare-thee-well among 
the big players.
  Now you come in with your $100,000, your $80,000, your retirement 
funds, and you want to make an investment and you want some advice and 
you want to talk to a broker, and the broker says, Oh, yes, we have 
exactly the product for you. In fact, he or she has been told to sell 
this product, even though it is not the best-performing product, it may 
not be a match for this couple, but it has the highest commissions for 
the firm and for the broker. That is what they do.
  What you are suggesting is that should be written into the law, that 
conflict of interest, and you talk about all the terrible things that 
happen. But when the adviser fiduciary study was done in 2013, 68 
percent said the fiduciary--this is of the investment industry--68 
percent said the fiduciary standard will not reduce products or 
services; 79 percent said it does not cost more to work as a fiduciary; 
and 65 percent said the fiduciary standard will not price investors out 
of the market. So the industry says that, but you have a whole theory 
how this is doomsday for the small investor. It is just not so.
  What you are doing is protecting the right of brokers to give you 
conflicted advice about the investment of your money, and they 
knowingly do it. You are saying that the industry cannot continue 
unless they are allowed to continue to give conflicted advice. That is 
why we have conflict of interest laws, because we don't allow people to 
do this when they have a responsibility.
  We should vote for this amendment and vote against the bill.
  I yield back the balance of my time.
  Mr. HENSARLING. Mr. Speaker, how much time do I have remaining?
  The SPEAKER pro tempore. The gentleman from Texas has 2\1/2\ minutes 
remaining.
  Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may 
consume.
  I think the audio system on the House floor is working quite well, 
and so I continue to be somewhat amazed by the number of speakers who 
get up and claim that broker-dealers can engage in conflicts of 
interest.
  Again, I will give the citation for the duty to disclose conflicts of 
interest, FINRA's Suitability Rule 2111. I would encourage those who 
haven't read it to actually read it so that we can actually have facts 
on the House floor.
  Mr. Speaker, what is truly radical here is the proponents of this 
amendment trying to upset 80 years of settled law, without any evidence 
that is compelling, to somehow believe that all of a sudden we are 
going to help a universe of people, who most of us believe, including 
half of the Democrats on the

[[Page H6869]]

Financial Services Committee, instead will be hurt, including a number 
of prominent Democratic senators who believe they will be hurt, these 
working moms and pops trying to provide for their family, trying to 
manage their nest eggs, having a new standard forced upon people they 
rely on. So all of a sudden, that investment advice is either going to 
get more expensive, it is going to disappear. All of a sudden, IRAs for 
working moms at prices they can afford will disappear all because we 
hear rhetoric about Wall Street.
  Well, I don't think I have had any letters of endorsement from 
anybody on Wall Street. We can talk about something else that is not 
applicable. Perhaps we can talk about ObamaCare. I am always happy to 
have that discussion once again.
  Again, this is a bipartisan bill. All we are trying to do is ensure, 
if 80 years of settled law that has helped working families is about to 
be upset, then we better have proof it is going to help the people that 
it claims to help. The amendment from the gentleman from California 
would totally eviscerate that.
  I urge opposition, and I yield back the balance of my time.
  The SPEAKER pro tempore. Pursuant to the rule, the previous question 
is ordered on the bill, as amended, and on the amendment offered by the 
gentleman from California (Mr. George Miller).
  Pursuant to clause 1(c) of rule XIX, further consideration of H.R. 
2374 is postponed.

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