The trickle-down effect of GOP gain

The Republican takeover of the House predicted by key pundits next month would have a major impact on legislation related to retirement plans and the firms that manage their money — but only measures with broad bipartisan support are likely to become law.

Speculation about what changes Republicans might impose have been running rampant in Washington because polling suggests the GOP could win control of both the House and Senate on Nov. 2, though a House takeover is considered more likely.

The prospects for long-pending legislation to enhance retirement plan fee disclosures are expected to fade entirely if Republicans win control of the House. That's because Rep. George Miller, D-Calif., the bill's key proponent, would lose his leadership post.

Sealing the measure's fate would be Rep. John Kline, R-Minn., who's in line to succeed Mr. Miller as chairman of the House Education and Labor Committee should there be a GOP takeover, opposed the Miller bill previously.

Spokeswoman Alexa Marrero said Mr. Kline was not available for comment, but in a June 24, 2009, statement before a committee vote on the Miller bill, Mr. Kline said House Republicans supported disclosure only in concept.

“What we do not support is disclosure that has no real value, or worse, that has the potential to actually harm workers,” Mr. Kline said in the statement.

Aaron Albright, a spokesman for Mr. Miller, declined to comment.

A GOP takeover of the House also could breathe new life into a proposal that would subject money management firms to regulation by the Financial Industry Regulatory Authority.

That would be the case because Rep. Spencer Bachus, R-Ala., — who is would succeed Rep. Barney Frank, D-Mass., as chairman of the House Financial Services Committee — backed legislation last year that would have subjected the roughly 4,000 money management firms associated with broker-dealers to FINRA regulation. FINRA is an industry self-regulatory organization that currently regulates broker-dealers; it is subject to SEC oversight.

Mr. Bachus' spokeswoman, Marisol Garibay, had not returned telephone calls or an e-mail seeking comment by press time.

Mr. Bachus' legislation was not included in the Dodd-Frank Wall Street Reform and Consumer Protections Act, and it did not become law. But the Dodd Frank law includes a provision that requires the SEC to conduct a study on whether additional examinations of money managers are warranted. The same law requires the SEC to consider whether money managers should be subject to SRO regulation. The law requires the SEC to report to Congress on its findings by January.

“If Mr. Bachus becomes chairman, it's possible that he could try to revive that set of issues,” David Tittsworth, executive director of the Investment Adviser Association, Washington, said in an interview. “He may be sympathetic if the SEC recommends legislation that would give the agency authority to designate an SRO for money managers.”

Republican lawmakers also would be expected to use their new leadership positions to hold investigatory hearings on the efforts of the SEC and other federal agencies to implement the legislative provisions of the recently adopted Wall Street regulatory overhaul.

But GOP lawmakers are unlikely to try to repeal the Dodd-Frank Act because President Barack Obama would likely veto any such effort, financial industry lobbyists said.

There are currently 255 Democrats in the House and 178 Republicans, with two vacancies. The Senate has 57 Democrats, 41 Republicans and two independents.As of Oct. 12, the Chicago-based polling aggregator RealClearPolitics.com projected that the GOP will hold 211 seats in the House and the Democrats, 185 — with 39 tossups. Also as of the same date, the website projected 48 Senate seats for the Democrats and 46 for the Republicans, with six tossups.

“It looks like the House is going to flip by a narrow margin, and right now it appears that the Senate is too close to call,” said Brian H. Graff, executive director and CEO of the American Society of Pension Professionals and Actuaries, Arlington, Va.

“At a minimum, you are going to see fewer Democrats in both (the Senate and House) chambers,” said Ed Ferrigno, vice president of Washington affairs, Profit Sharing/401(k) Council of America, Chicago.

If Republicans win the House, Rep. John Boehner, R-Ohio, is expected to replace Rep. Nancy Pelosi, D-Calif., as House speaker, insiders say. Mr. Boehner is an expert on pension issues and was one of the key backers of the Pension Protection Act of 2006.

“Boehner understands these issues,” said William F. Sweetnam Jr., a partner at the Groom Law Group, Washington, and the Treasury Department's benefits tax counsel during the George W. Bush administration. “If you're in the retirement arena, it's nice to have somebody in leadership who knows these issues.”

Still, other lobbyists thought one key result of a tighter party margins expected in the election's wake will be an impasse for pension-related legislation that lacks broad bipartisan consensus.

“At this point, you can't think that either side is going to have an overwhelming majority,” Mr. Sweetnam said. “That may mean that there's going to be a lot of gridlock, regardless of who wins.”

“I would not disagree that there's going to be gridlock,” added Mark Ugoretz, president of the ERISA Industry Committee, Washington.