Republicans Move to Block 401(k) Rule, Siding With Wall Street

House Republicans advanced a measure to overturn the US Labor Department’s rule governing investment plan advisers that has been opposed by many on Wall Street.

The Committee on Education and the Workforce voted 23-18 Wednesday in favor of the resolution brought under the Congressional Review Act. The rule, which would extend strict fiduciary standards to more retirement plan advisers, has drawn the ire of both congressional Republicans and business groups, particularly in the life insurance industry.

The vote was mostly along party lines, with Rep. Lori Chavez-DeRemer (Ore.) as the sole Republican who voted against the resolution.

Committee Chairwoman Virginia Foxx (R-N.C.) called the rule a “reckless overreach” by the Department of Labor.

“It will eliminate options for working-class Americans, reduce their ability to retire, and limit their access to financial advice,” Foxx said.

The CRA resolution marks another battle between Republicans on Capitol Hill and the Biden administration as lawmakers have pushed through several measures to undo rulemaking by executive agencies, including the DOL and the National Labor Relations Board. The rules have faced two-pronged attacks as industry opponents have also attempted to block them in federal courts.

The AFL-CIO and dozens of other major unions wrote a letter to lawmakers Tuesday asking them to reject the Republican CRA resolutions that they called the “latest weapon in a war on workers waged by special interests.”

“We ask that you not allow private equity, the financial industry, multinational franchisors, unionbusters, or other special interests to use this tool to undo the progress that workers are making via federal rulemaking,” the unions said in the letter. “We strongly urge you to stand with working families and vote no on all such CRA resolutions.”

Multiple groups of insurance industry associations have sued the DOL over the fiduciary rule, which they say exceeds the agency’s authority and adds burdensome costs to businesses. The rule applies fiduciary duties to annuities providers and other previously unaffected sectors of the retirement investment industry.

The Supreme Court’s recent overturning of the Chevron doctrine in Loper Bright v. Raimondo has also bolstered legal challenges to rules and anti-regulation sentiment in Congress. The decision, which gives courts more power to interpret ambiguous laws, has been touted by Republicans as a win against the administrative state.

Democrats opposed the Supreme Court’s decision and stood by DOL rulemaking despite the wave of CRA resolutions. They praised the Department Wednesday for the fiduciary rule, saying it seeks to curb advice that isn’t delivering workers the best return on their investment.

“Unscrupulous financial advisers can steer their retirement clients toward high-fee products that are not in the client’s best interest,” said Rep. Bobby Scott (Va.), the top Democrat on the committee. “This is what’s known as conflicted advice, and it’s harming retirement savers.”

Lawmakers have the ability to overturn agency rules under the CRA as long as the resolution seeking to block them clears both chambers of Congress by simple majorities and is signed by the president. Multiple CRA measures have passed the House and Senate over the past few years, including one on the DOL’s 401(k) sustainable investing rule, only to then be vetoed by President Joe Biden.