As widely expected, President Donald Trump will today issue an order halting the implementation of the Department of Labor’s controversial fiduciary rule, according to a senior White House official. Trump will also order a “sweeping” review of the Dodd-Frank Act enacted in 2010 in response to the financial crisis of 2008.
The two moves are in keeping with the President’s pledge to roll-back regulations that he claims are drags on the U.S. economy. Both the fiduciary rule and Dodd-Frank are signature pieces of President Barack Obama’s legacy and will likely be fiercely defended by consumer groups and Democratic leaders. The latest moves to unravel these key Obama accomplishments come on the heels of Trump’s first executive order, which outlines his plan to also unravel the Affordable Care Act, commonly referred to as “Obamacare.”
According to the White House official, in an order expected to be unveiled later today, the President will direct the Department of Labor to “indefinitely suspend” the implementation of the fiduciary rule currently scheduled to begin implementation on April 10.
“We want them to cease the implementation of this and completely review the fiduciary rule,” said the White House official.
“We think that this was a complete miss on what they were trying to do,” the official added. “It has taken away a huge variety of investment options for individual investors.”
The DOL rule was intended to prevent consumers from being steered to retirement investments with higher fees or lower returns that benefit the advisors recommending or selling them.
The Obama administration estimated that those conflicts of interest cost Americans $17 billion a year.
But Republicans, business groups and leaders in the financial industry fiercely opposed it. They said the rule would drive up the cost of investments by forcing asset management firms to spend money on implementation and make it more difficult for average Americans to get retirement advice, particularly investors with modest portfolios who would be unable to afford investment advice fees.
Last spring, Congress voted to block the fiduciary rule, but were met with an Obama veto.