Borzi was summoned to a hearing before a House Education and the Workforce subcommittee, where lawmakers from both parties echoed industry concerns. They complained about her lack of coordination with the SEC. Representative Joe Heck, a Nevada Republican, told Borzi he was hearing from many brokers in his district who said they’d be unable to charge commissions.

Frank Note

Ultimately, more than 200 lawmakers weighed in with letters to Labor -- including one of the authors of Dodd-Frank, then Democratic Representative Barney Frank of Massachusetts, who wrote to “strongly urge” the department to withdraw and revise its rule.

The Financial Services Institute, a trade group that represents independent broker-dealers and financial advisers around the country, got 7,000 members to fax personal letters to the White House opposing the rule.

According to two people who worked on the issue and spoke on condition of anonymity, the Roundtable contacted Wall Street Journal editorial writers. The newspaper published a piece in August 2011 citing industry-funded research that found the fiduciary rule could cut off 7 million IRAs from meaningful investment services.

“Someone from the White House needs to step in here before Ms. Borzi’s savings bomb falls on the heads of American investors,” the editorial concluded.

Economic Council

The White House did step in, according to people who lobbied on both sides of the issue. The industry had worked through Obama’s National Economic Council, arguing to its director, Gene Sperling, that the Labor Department was creating a regulatory morass, said three people who attended meetings with the council.

Sperling, who left the post in March, said in an interview that while the economic team “has always taken a clear position that there are some real conflict-of-interest problems” in the broker-client relationship, “we felt it was important to make sure any steps were balanced, well-targeted and reasonably coordinated.”

The White House’s concerns were conveyed to the leadership at the Labor Department, according to a person who worked on the issue for the government.

That September, Labor issued a press release saying it was withdrawing the regulation and would re-propose it in “early 2012.”

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