The Department of Labor's process for developing a new fiduciary standard was flawed by interagency conflict, said a report from the Senate Homeland Security and Governmental Affairs Committee.
The panel's inquiry, which started in February 2015, two months before the DOL proposed a new rule, turned up numerous concerns raised by career staff at the Securities and Exchange Commission and other agencies that were disregarded by Labor Department officials, said the report prepared by the committee's Republican staff.
The (Senate Republicans') staff found that the Labor Department frequently prioritized the expeditious completion of the rule-making process at the expense of thoughtful deliberation, and political appointees at the White House played a key role in driving the rule-making process, the report said.
The administration was predetermined to regulate the industry and sought evidence to justify its action. In e-mails to senior White House advisers, a Labor Department official wrote of the need to find literature and data to support the need for a tougher standard, said the report, released Feb. 24.
The report said the Labor Department remains non-responsive to requests from committee Chairman Ron Johnson, R-Wis., for documents, refusing to produce communications between the department and the White House and asking the SEC to reject similar requests. The additional burdens and complexity of the proposed rule threaten to harm low- and middle-income Americans by increasing the cost of investment advice, Mr. Johnson said in a news release accompanying the report.
Labor Department spokesman Michael Trupo said the report mischaracterizes the documents reviewed. In an e-mailed statement, Mr. Trupo said DOL officials coordinated closely with SEC staff during the entire four-year period of developing the proposed rule, adding that the documents make clear that our engagement with the SEC was comprehensive, and that the SEC's input was incorporated and strengthened our reproposal.
The Department of Labor has been, and remains, committed to developing the strongest possible rule, while also reducing duplicative regulation and minimizing the compliance burden on firms, he said.
On Feb. 22, House Speaker Paul Ryan, R-Wis., said in his blog that he was determined to do everything possible to stop the rule.
The report is available on the Senate Homeland Security and Governmental Affairs Committee's website.