Be it over key appointments in his administration or whether the wall is concrete or virtual, there has been little clarity of direction in the few weeks since one of the most surprising presidential elections in our history. The Trump administration continues to evaluate candidates for the thousands of appointments to make and has, therefore, not confirmed their direction on anything but the most basic ideals expressed in the campaign.
Premise: "Will he or won't he?" — America’s new favorite parlor game featuring Donald Trump. For those keeping score in the financial services sector, the question centers on how the administration will handle the controversial and sweeping DOL fiduciary rule.
Swamp draining aside, there is little doubt that many presidential executive orders issued by Obama will be revoked by President Trump. The fiduciary rule cannot be one of them. Effectively, the rule became “good law” this past summer. Clearing all of the procedural hurdles and, of course, Congressional efforts to derail the effort were simply vetoed by President Obama shortly thereafter.
So what are the options?
Reverse. Specifically, the rule is slated to become applicable law on April 10, 2017. Thus, the “switch” is now turned to the on position and a whole new regulatory process would be required if it were to be reversed. This means that any changes proposed by the new secretary of labor require a 60-day comment period. Since the new secretary takes effect on January 20th, it would appear unlikely that even a Trump-led government could move that quickly.
Reform. The rule can be modified—once again—by action of the new secretary. As with reversal, this prompts a new 60-day comment period, and the April start date makes this an unlikely option.
Repeal. As mentioned, the same Republican-led House and Senate already voted to squash the rule, but that was vetoed by President Obama. Would President Trump sign such legislation? (Probably.) Would it clear a Senate with Bernie Sanders and Elizabeth Warren as members? (Maybe, but again, unlikely before the April deadline.)
Delay. Of course a sober "let's think about this a little bit longer" option exists as well. This could be implemented by any of the aforementioned players. The new labor secretary (or an interim acting secretary if confirmation is bogged down in the Senate) could issue an interim final rule delaying the effective date. Congress could present President Trump with an option to delay as well. This may be the most likely course of action since a previous effort to delay—eventually vetoed by President Obama—had some bipartisan support.
And oh, by the way ... The rule is still being challenged via litigation in several jurisdictions. The possibility of an adverse ruling exists. Alternatively, might a Trump Administration drop their defense against the litigation all together—waving a white flag?
Does it matter? In the midst of all this prognostication, one must ask the practical question. Notwithstanding the tight window availed for change, this is a sweeping change with far-reaching implications. Financial service companies have spent hundreds of millions of dollars preparing for the new rule.