House Ways and Means Markup of H .R. 4294
House Ways and Means Committee
“Committee Markup”
Wednesday, February 3, 2016
Key Topics & Takeaways
- Final Vote: The committee passed the bill to the House in a 26-12 vote. The three Democratic members voting yes were Reps. Neal, Thompson and Larson.
- Clients First: Rep. Neal explained that the SAVERS Act is motivated by a client-first notion that ensures middle income investors have access to advice, and said that there is “no nefarious motive attached” to the bill.
- Support: Rep. Tiberi said that the DOL’s proposed rule is causing “a ton of anxiety in America.” Rep. Kelly added that “if this [legislation] isn’t protecting America, I don’t know what is.”
- Transparency: Rep. Roskam explained that that with the lack of transparency, DOL is moving “quickly, silently…secretly,” and therefore it is “perfectly reasonable” for the Committee to move forward with legislation.
- Opposition: Many Democratic lawmakers noted concern over passing legislation prior to the DOL releasing their final rule, claiming that the markup is premature.
Bills Considered
Opening Statements on H.R. 4294
In his opening statement, Chairman Kevin Brady (R-Texas) stated how grateful he is for both H.R. 4294 and H.R. 4293, as they enhance protections for those saving for retirement and allows investors to select the investment model that makes sense for them. He stressed that the Department of Labor’s (DOL’s) proposed rule – which is currently under review at the Office of Management and Budget (OMB) – would “significantly harm” small businesses and those individuals saving for retirement, as it will push them out of 401(k) plans and individual retirement accounts (IRAs) and into federal programs.
Subcommittee Chairman Peter Roskam (R-Ill.) noted the 386,000 individual comments the DOL received on their rule and how it requires “endless proposals” that “treat investors like fools.” He continued that H.R. 4294 creates a new enforceable best interest requirement that ensures investors can access a variety of products, to include annuities, and does not force such investors into fixed-fee arrangement. The SAVERS Act requires “smarter” disclosures, he explained, such as communicating compensation earned by advisors, and is a “sensible, bipartisan solution” to strengthening retirement savings.
Ranking Member Sandy Levin (D-Mich.) noted his opposition to the markup, explaining that the Committee should wait until the final rule is released so members have time to review prior to enacting any additional legislation.
Rep. Richard Neal (D-Mass.) explained that with Americans being more in charge of their retirement accounts, investors “simply need more advice, not less.” He continued that the SAVERS Act is motivated by a client-first notion and that there is “no nefarious motive attached.”
H.R. 4294, “Strengthening Access to Valuable Education and Retirement Support Act of 2015”
Brady introduced an amendment in the nature of a substitute, which would amend the Internal Revenue Code (IRC) to ensure retirement advisors look out for their client’s best interest and prohibits the DOL from amending any rules under the Employee Retirement Income Security Act (ERISA) before the enactment of the bill.
Discussion with Thomas Barthold, Chief of Staff, Joint Committee on Taxation
Barthold briefly explained the changes found in the amendment in the nature of a substitute and took questions from committee members. Rep. Charles Rangel (D-N.Y.) raised concern over the impact the legislation would have on the DOL’s proposal. Rep. Jim McDermott (D-Wash.) asked how much money the legislation will save consumers, citing the Council of Economic Advisers estimate that bad advice costs consumers $17 billion annually, though Barthold had not conducted a quantitative analysis. Rep. Xavier Becerra (D-Calif.) raised concern that the Joint Committee on Taxation had only reviewed the legislation for a month, noting that the DOL has been reviewing their proposed rule for years. Rep. Bill Pascrell (D-N.J.) noted his concern that the legislation sets a “dangerous precedent.”
Democratic Support
Neal assured the committee that the legislation protects middle income investors, not the wealthy, and ensures that these investors have access to financial advice.
Republican Support
Rep. Pat Tiberi (R-Ohio) explained that additional hearings on the topic are not necessary, as the fiduciary rule is causing “a ton of anxiety in America.”
Rep. Pat Meehan (R-Pa.) expressed his support for the legislation, adding that it protects the “very people that need advice.”
Rep. Mike Kelly (R-Pa.) supported the bill, saying “if this isn’t protecting America, I don’t know what is.”
Rep. Diane Black (R-Tenn.) expressed her frustration over the power the Administration has in the rulemaking process, as “Congress’ hands are behind their backs.” She continued that Congress should pursue legislation that protects Americans.
Rep. Bob Dold (R-Ill.) said that the cosponsors of the legislation have “raised the standard” and that the legislation is “something Congress can and should be able to do.”
Rep. Jim Renacci (R-Ohio) declared his support for the bill and commented on his concern that the DOL’s rule will not be able to be fixed once it is made final, adding that it will “hurt Americans trying to save for retirement.”
Roskam commented that the 96 Democratic lawmakers that sent a letter to the DOL questioning the proposed rule should be able to see the final rule before it is released. He continued that with the lack of transparency, DOL is moving “quickly, silently…secretly,” and therefore it is “perfectly reasonable” for the Committee to move forward with legislation.
Democratic Opposition
Pascrell expressed his concern that the legislation “sets a terrible precedent,” but noted that the DOL has been less than transparent with their process.
Rep. Jim McDermott (D-Wash.) agreed with Pascrell, stating that the markup undermines the DOL and questioned why there have been no hearings on the legislation before them.
Becerra explained that he is concerned the legislation moves the burden from advisors to the consumer when it comes to making decisions on what the best advice is.
Rep. Lloyd Doggett (D-Texas) said that the legislation “obstruct[s] the protection of most Americans rather than preserving it.”
Rep. Earl Blumenauer (D-Ore.) said that the markup undercuts the rule process and added that if the DOL’s final rule is “awful,” he will work the Committee on legislation.
Rep. Ron Kind (D-Wis.) explained that the legislation is premature and that the Committee should not judge a rule that has not been released yet.
Rep. Danny Davis (D-Ill.) expressed that undermining the Congressional Review Act is “extremely troubling” and added that the intent of the legislation “seems to interfere and halt any modernization of a fiduciary rule.”
Rep. Linda Sanchez (D-Calif.) stated that the legislation is premature prior to the final rule being released and that she will ensure the final rule “meets her standards.”
Rep. Joseph Crowley (D-N.Y.) expressed his concern that the DOL has not shared what is in the final rule, but that the Congressional Review Act will allow lawmakers to review upon its release.
Levin echoed the idea that the legislation sets a “dangerous precedent” and that passing legislation prior to the rule being released is a “serious misstep.”
Final Vote
The Committee passed the bill to the House in a 26-12 vote. The three Democratic members voting yes were Reps. Neal, Thompson and Larson.
For more information on this event, please click here.
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House Ways and Means Committee
“Committee Markup”
Wednesday, February 3, 2016
Key Topics & Takeaways
- Final Vote: The committee passed the bill to the House in a 26-12 vote. The three Democratic members voting yes were Reps. Neal, Thompson and Larson.
- Clients First: Rep. Neal explained that the SAVERS Act is motivated by a client-first notion that ensures middle income investors have access to advice, and said that there is “no nefarious motive attached” to the bill.
- Support: Rep. Tiberi said that the DOL’s proposed rule is causing “a ton of anxiety in America.” Rep. Kelly added that “if this [legislation] isn’t protecting America, I don’t know what is.”
- Transparency: Rep. Roskam explained that that with the lack of transparency, DOL is moving “quickly, silently…secretly,” and therefore it is “perfectly reasonable” for the Committee to move forward with legislation.
- Opposition: Many Democratic lawmakers noted concern over passing legislation prior to the DOL releasing their final rule, claiming that the markup is premature.
Bills Considered
Opening Statements on H.R. 4294
In his opening statement, Chairman Kevin Brady (R-Texas) stated how grateful he is for both H.R. 4294 and H.R. 4293, as they enhance protections for those saving for retirement and allows investors to select the investment model that makes sense for them. He stressed that the Department of Labor’s (DOL’s) proposed rule – which is currently under review at the Office of Management and Budget (OMB) – would “significantly harm” small businesses and those individuals saving for retirement, as it will push them out of 401(k) plans and individual retirement accounts (IRAs) and into federal programs.
Subcommittee Chairman Peter Roskam (R-Ill.) noted the 386,000 individual comments the DOL received on their rule and how it requires “endless proposals” that “treat investors like fools.” He continued that H.R. 4294 creates a new enforceable best interest requirement that ensures investors can access a variety of products, to include annuities, and does not force such investors into fixed-fee arrangement. The SAVERS Act requires “smarter” disclosures, he explained, such as communicating compensation earned by advisors, and is a “sensible, bipartisan solution” to strengthening retirement savings.
Ranking Member Sandy Levin (D-Mich.) noted his opposition to the markup, explaining that the Committee should wait until the final rule is released so members have time to review prior to enacting any additional legislation.
Rep. Richard Neal (D-Mass.) explained that with Americans being more in charge of their retirement accounts, investors “simply need more advice, not less.” He continued that the SAVERS Act is motivated by a client-first notion and that there is “no nefarious motive attached.”
H.R. 4294, “Strengthening Access to Valuable Education and Retirement Support Act of 2015”
Brady introduced an amendment in the nature of a substitute, which would amend the Internal Revenue Code (IRC) to ensure retirement advisors look out for their client’s best interest and prohibits the DOL from amending any rules under the Employee Retirement Income Security Act (ERISA) before the enactment of the bill.
Discussion with Thomas Barthold, Chief of Staff, Joint Committee on Taxation
Barthold briefly explained the changes found in the amendment in the nature of a substitute and took questions from committee members. Rep. Charles Rangel (D-N.Y.) raised concern over the impact the legislation would have on the DOL’s proposal. Rep. Jim McDermott (D-Wash.) asked how much money the legislation will save consumers, citing the Council of Economic Advisers estimate that bad advice costs consumers $17 billion annually, though Barthold had not conducted a quantitative analysis. Rep. Xavier Becerra (D-Calif.) raised concern that the Joint Committee on Taxation had only reviewed the legislation for a month, noting that the DOL has been reviewing their proposed rule for years. Rep. Bill Pascrell (D-N.J.) noted his concern that the legislation sets a “dangerous precedent.”
Democratic Support
Neal assured the committee that the legislation protects middle income investors, not the wealthy, and ensures that these investors have access to financial advice.
Republican Support
Rep. Pat Tiberi (R-Ohio) explained that additional hearings on the topic are not necessary, as the fiduciary rule is causing “a ton of anxiety in America.”
Rep. Pat Meehan (R-Pa.) expressed his support for the legislation, adding that it protects the “very people that need advice.”
Rep. Mike Kelly (R-Pa.) supported the bill, saying “if this isn’t protecting America, I don’t know what is.”
Rep. Diane Black (R-Tenn.) expressed her frustration over the power the Administration has in the rulemaking process, as “Congress’ hands are behind their backs.” She continued that Congress should pursue legislation that protects Americans.
Rep. Bob Dold (R-Ill.) said that the cosponsors of the legislation have “raised the standard” and that the legislation is “something Congress can and should be able to do.”
Rep. Jim Renacci (R-Ohio) declared his support for the bill and commented on his concern that the DOL’s rule will not be able to be fixed once it is made final, adding that it will “hurt Americans trying to save for retirement.”
Roskam commented that the 96 Democratic lawmakers that sent a letter to the DOL questioning the proposed rule should be able to see the final rule before it is released. He continued that with the lack of transparency, DOL is moving “quickly, silently…secretly,” and therefore it is “perfectly reasonable” for the Committee to move forward with legislation.
Democratic Opposition
Pascrell expressed his concern that the legislation “sets a terrible precedent,” but noted that the DOL has been less than transparent with their process.
Rep. Jim McDermott (D-Wash.) agreed with Pascrell, stating that the markup undermines the DOL and questioned why there have been no hearings on the legislation before them.
Becerra explained that he is concerned the legislation moves the burden from advisors to the consumer when it comes to making decisions on what the best advice is.
Rep. Lloyd Doggett (D-Texas) said that the legislation “obstruct[s] the protection of most Americans rather than preserving it.”
Rep. Earl Blumenauer (D-Ore.) said that the markup undercuts the rule process and added that if the DOL’s final rule is “awful,” he will work the Committee on legislation.
Rep. Ron Kind (D-Wis.) explained that the legislation is premature and that the Committee should not judge a rule that has not been released yet.
Rep. Danny Davis (D-Ill.) expressed that undermining the Congressional Review Act is “extremely troubling” and added that the intent of the legislation “seems to interfere and halt any modernization of a fiduciary rule.”
Rep. Linda Sanchez (D-Calif.) stated that the legislation is premature prior to the final rule being released and that she will ensure the final rule “meets her standards.”
Rep. Joseph Crowley (D-N.Y.) expressed his concern that the DOL has not shared what is in the final rule, but that the Congressional Review Act will allow lawmakers to review upon its release.
Levin echoed the idea that the legislation sets a “dangerous precedent” and that passing legislation prior to the rule being released is a “serious misstep.”
Final Vote
The Committee passed the bill to the House in a 26-12 vote. The three Democratic members voting yes were Reps. Neal, Thompson and Larson.
For more information on this event, please click here.