Business

Black Chamber comes out against Obama’s financial adviser regs

by Kevin Cirilli - 08/19/15 4:46 PM ET

The National Black Chamber of Commerce (NBCC) is coming out swinging against President Obama’s “harmful” regulatory proposal for financial advisers.

The NBCC, which represents 100,000 black-owned businesses and has more than 140 nationwide chapters, argued that the proposal would raise costs for low-income Americans seeking financial advice and create a regulatory burden for small businesses.

{mosads}”The new DOL regulations will likely result in fewer commission-based services in the marketplace, leaving only fee-based and managed account services that are not affordable options for many individuals in our communities,” NBCC President and CEO Harry C. Alford wrote in a letter sent Wednesday to Department of Labor (DOL) Secretary Thomas Perez and members of Congress.

He urged DOL officials “to evaluate the economic impact of this proposal on small businesses and re-propose this harmful regulation.”

The administration argues that the new disclosure rules are needed for financial advisers to better protect consumers, who could be unaware that their financial adviser might be earning commissions off selling them financial advice — even if that advice isn’t in the consumers’ best interest.

But the business community, along with some moderate Democrats and Republicans, argues that the regulations — known as “fiduciary standards” — would raise costs and are unneeded because current regulations already exist to punish bad actors.

The NBCC letter, obtained first by The Hill, comes after two prominent members of the Congressional Black Caucus (CBC) spoke out against the proposal last month.

CBC Reps. David Scott (D-Ga.) and Lacy Clay (D-Mo.) signed onto a bipartisan letter last month circulated by Rep. Ann Wagner (R-Mo.) that criticized the fiduciary proposal, which administration officials failed to implement facing similar criticism in 2010.

“You can sit in an ivory tower and make up all of these [seemingly] wonderful things, but they don’t have practicality of making sure it doesn’t suffocate our financial system,” Clay said in an interview last month. “Furthermore, the people who [are] hurt the most with this proposal are those in the lower income stream and the middle income stream.”

In March 2013, CBC officials sent a letter to DOL officials citing concerns that the rule changes would hurt minority communities. They have not taken a position on this current proposal.

Scott and Clay are joined by an increasing number of moderate Democrats in both chambers who are criticizing the proposal. The business community is eyeing the fall’s budget battle as a potential vehicle to delay the administration’s efforts to implement it in early 2016.

Progressives, including Sen. Elizabeth Warren (D-Mass.) and a broad coalition of consumer activist groups, are supportive of the proposal.

But the involvement of Scott and Clay indicates there is also skepticism among Democrats about the rule, which is strongly opposed by the business community.

DOL Letter Fiduciary Rule

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