Page 12 - Investment Advisor - Jan/Feb 2021

WASHINGTON WATCH

Industry officials anticipate that the regulation and more stringent super- meaningful employment, fair pay, a safe
Biden administration will pull back vision, including an expansion of the workplace, and a dignified retirement.”
Labor’s fiduciary PTE to align with Reg Volcker Rule, tougher stress tests, and Added Scott: “Our nation continues
BI and toughen it. greater scrutiny of their actions.” to endure a deep economic crisis, and
Fred Reish, partner at Faegre Drinker The Labor Department “could take the absence of federal leadership has
in Los Angeles, said that Walsh “as might anti-business actions as well,” Friedman allowed a public health emergency to
be expected,…is pro-labor and fairly lib- said. “We could see expanded eligibility balloon into an economic crisis of his-
eral. Based on that, I imagine his views for overtime pay and an enhanced abil- toric proportions.”
of a strong fiduciary standard would be ity of employees to unionize and enforce In the short term, investors “will be
favorable. As a former labor leader, he labor rights.” pleased by the prospect of greater stim-
is also likely to be deeply interested in As to the Labor Department fidu- ulus,” Friedman said. “Later, though,
solving the underfunding issues affect- ciary prohibited transaction exemption they will fear a tax increase, which the
ing many multi-employer Democrats could pass with-
pension plans.” “I do expect [the SEC under Biden] out regard to the filibuster.”
Roper said that the Labor The filibuster is impor-
Department under the Biden to move relatively quickly to clarify tant, Valliere explained,
administration will have to the meaning of best interest, and to “because it will allow the
address two issues regarding Democrats to pass a major
Labor’s fiduciary PTE. do so in a way that represents a clear package with only 50 votes
First, “what to do about enhancement over suitability…” if it’s part of a budget-related
the PTE and what to do bill — maybe twice in 2021,
about the definition of fidu- —Barbara Roper, Consumer some sources say, once for
ciary investment advice,” another stimulus, once for
Roper said. “In both cases, it Federation of America tax hikes. But non-budget
would take notice and com- bills on issues like a Green
ment rulemaking to reverse or revise the to align with the SEC’s Reg BI, “we don’t New Deal probably will languish.”
rules, since they were finalized before know how the new Labor secretary will More concerning to the markets,
January 20. And I would expect the DOL view the DOL fiduciary rule,” Friedman Friedman said, “would be a move by
to do just that.” said. “The new regime there might sim- a Democratic majority to eliminate the
Steve Saxon, partner at Groom Law ply leave the rule as is. Or it could decide filibuster itself. Doing so would allow
Group in Washington, said that Walsh to reconsider whether the rule is suf- Congress to pass a broad array of
being picked “will not, in and of itself, ficiently strict, particularly given criti- Democratic initiatives, many of which are
impact” the fiduciary advice PTE. “That cism by investor rights organizations anti-business. I don’t think the filibuster
doesn’t mean the new DOL won’t review that view the rule is too lax.” will be eliminated, but even an aborted
and likely revise the PTE. …Walsh should Rep. Virginia Foxx, R-NC, Republican effort to do so could scare the market.”
be focused immediately on unemploy- Leader of the Committee on Education Valliere added that there’s a “much bet-
ment and dealing with the pandemic.” and Labor, said in an early January state- ter chance that another stimulus bill will
According to his official bio, since taking ment that Walsh’s “background in orga- pass later this winter as COVID rages; the
office, “Walsh has focused on strengthen- nized labor signals that he will work to $900 billion package two weeks ago was
ing Boston’s schools, adding hundreds of deliver on left-wing campaign prom- simply a ‘down payment,’ as Biden stated.”
high-quality pre-kindergarten seats, fund- ises including a $15 mandated minimum Biden “probably will get more than
ing extended learning time and advanced wage, punitive one-size-fits-all regula- $1 trillion in the next bill, a plus for the
curriculum at more schools, and securing tions, forced unionization of small busi- economy (but a concern for the bond
tuition-free community college for Boston nesses, and eliminating the independent market, where the 10-year Treasury yield
Public Schools graduates.” contractor model, among many others.” topped 1% overnight),” Valliere said.
As to executive actions under a Biden Rep. Bobby Scott, D-Va., chairman of Higher taxes are coming, Valliere
administration, added Andy Friedman, the Committee on Education and Labor, warned, the “only issue is when and by
principal and founder of The Washington said in a statement that with Walsh’s how much.”
Update, “it is fair to expect Treasury to experience, “I am confident that he will
shine a harsher light on the financial ser- restore the mission of the Department Washington Bureau Chief Melanie Waddell can
vices industry. Banks could face tighter to ensure that Americans can obtain be reached at [email protected].

10 INVESTMENT ADVISOR JANUARY/FEBRUARY 2021 | ThinkAdvisor.com