[Congressional Record Volume 159, Number 153 (Wednesday, October 30, 2013)]
[Extensions of Remarks]
[Pages E1602-E1603]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     RETAIL INVESTOR PROTECTION ACT

                                 ______
                                 

                               speech of

                         HON. CAROLYN McCARTHY

                              of new york

                    in the house of representatives

                       Tuesday, October 29, 2013

  Mrs. McCARTHY of New York. Mr. Speaker, I rise today in support of 
H.R. 2374, the Retail Investor Protection Act. As you may know, this 
legislation would prohibit the Secretary of Labor from finalizing a 
regulation related to investment advisors until the SEC issues a final 
rule on the standard and conduct for brokers and dealers of securities. 
The SEC, under Dodd-Frank, already has been designated with the duty of 
providing universal standards of conduct for brokers and dealers that 
are similarly in place for investment advisors.
  Quite frankly, Mr. Speaker, I have been disappointed in the 
Department of Labor's (DOL) efforts to redefine fiduciary duty for the 
purposes of ERISA. While I have no doubt that the ERISA law needs to be 
updated, I believe that the Department has not acted in good faith to 
put out a pragmatic and acceptable rulemaking. I, along with a 
bipartisan group of my colleagues, was successful in having the DOL 
withdraw their original rulemaking pertaining to fiduciary status after 
we raised both financial security concerns on behalf of average 
consumers and investors and conflicts of intent with the SEC. 
Unfortunately, since the Department's withdrawal, it has not been 
amenable to making practical changes going forward.
  Over the course of the past couple of years, I have questioned then-
Secretary of Labor Hilda Solis and have met with Employee Benefits 
Security Administration officials, including Assistant Secretary 
Phyllis Borzi to get a better handle on the impetus of DOL's efforts. 
Following those conversations, I can report

[[Page E1603]]

that, while the Department's intent is in the right place in regard to 
this rulemaking, its efforts have ultimately been misplaced. For me, 
concerns remain for the future of low-balance IRA holders who may be 
orphaned if the DOL abandons the brokerage model in favor of either 
``do it yourself'' online tools, that are often times confusing to 
average investors, or an advisory model, that typically is out of the 
price range of average consumers and requires a high minimum balance 
for account holders. Further, questions remain over the extent of the 
coordination between DOL and the SEC. The letters I've seen between the 
agencies are superficial in nature and certainly do not give the 
indication that any substantial conversations have occurred on the 
issue. Finally, DOL has not quelled the fears of advisors and broker-
dealers that believe that liability concerns might curb access to basic 
financial information for consumers if a broad fiduciary definition is 
adopted.
  Mr. Speaker, H.R. 2374 is not an ideal bill and I do have 
reservations about the precedent this legislation may set in regard to 
the regular order process for agency rulemakings. However, as I noted 
above, the Department of Labor has not given me full faith that this 
process is moving forward in a responsible manner, especially given its 
shared jurisdiction with the SEC.
  Especially in these uncertain economic times, this Congress must be 
focused on incentivizing responsible investment and augmenting access 
to financial literacy and education. I do not believe these tests have 
been met successfully thus far by DOL and because of the potentially 
stifling affect a shortsighted rule may have on the national economy, I 
will lend my support to the Retail Investor Protection Act.

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