WASHINGTON The U.S. Senate voted along party lines on Tuesday to repeal a new Labor Department rule on retirement advice after a debate that stretched over the course of the day.
The resolution, approved by a vote of 56 to 41, is a largely symbolic move that President Barack Obama has already threatened to veto. The House of Representatives passed a similar version last month.
Obama’s administration in April released the rule setting a fiduciary standard for financial brokers who sell retirement products, requiring them to put clients’ best interests ahead of their own bottom lines.
Tuesday’s arguments revolved around what is best for middle- and lower-income workers.
Republicans, who control both chambers of Congress, say the rule will be expensive for brokers and force them to get rid of Main Street clients and small businesses that offer 401(k) plans. They also say the rule does not take into account existing regulations on financial advice.
Democrats say profit-hungry advisers have exploited middle- and lower-class workers by recommending retirement products that mostly serve to line their own pockets.
Kicking off the debate, the most powerful Republican in the Senate, Kentucky’s Mitch McConnell, said blocking the rule would help “smaller savers.”
“I have sincere concerns about what this could mean for the ability of investment advisers to provide quality financial advice, but also for the ability of consumers to seek affordable retirement options,” he said.
Nevada’s Harry Reid, the most powerful Democrat in the chamber, countered that there was nothing wrong with “a rule that would require investment advisers to act in the best interest of their investors.”
One Republican, Georgia Senator Johnny Isakson, described the rule as “a solution in search of a problem,” while fellow party member Lamar Alexander of Tennessee said “we should call this the ‘Only the Rich Retire’ rule.”
Democrat Cory Booker of New Jersey said the rule would allow people to “retire with dignity” and without worries that an “adviser will exploit you.”
Fellow Democrat Patty Murray of Washington said: “Some financial advisers have lined their own pockets by steering clients toward complicated investments. Some have recommended that retirees make transactions that come with hidden fees. And some get commission when they sell a financial product, even if it doesn’t make sense for a client,” she said.
“We finally have a new protection that would right that wrong.”
(Reporting by Lisa Lambert; Editing by Dan Grebler)