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Does New U.S. Rule Favor Mutual Funds vs. Insurers' Annuities?
FYI: Lincoln National Corp., the Radnor-based life insurer and retirement investments company, is among a group of American insurers facing a steep drop in annuities sales to retirement investors and their IRA accounts, if a year-old Obama adminstration consumer-protection proposal gets enacted this winter, as industry observers expect Regards, Ted http://www.philly.com/philly/blogs/inq-phillydeals/Is-US-favoring-mutual-funds-vs-insurers-annuities.html
I do not agree that brokers will be less willing to sell annuities because they require more work. Yes, it will be more work, but the payoff will also be higher.
Agree with @Alban. More paper work wouldn't deter the sale of annuities if there are sufficient returns.
But there is one clause in there that if enacted/enforced would completely stop its sales through third party brokers - have fiduciary responspilibilities to customers. Does not matter what the product is, they would not want to sell anything where they would have to assume fiduciary responsibilities. They can be sued out of any returns they can make. This is worse in annuities where a significant amount of profits seem to come from overselling the product with fine print not well understood by the purchasers and often detrimental to their financial needs. This is what the annuity industry would be worried about.
OK, I see. But this does not seem to be such a bad thing from the point of view of investors. Once annuities are better explained to them, fewer of them will want to buy them.
My two line summary: Fiduciary responsibility will now generally apply to advice on IRAs (so if brokers intend to avoid that responsibility, they'll have to stop selling IRAs altogether, which won't happen), and virtually nothing gets special treatment or singled out. If annuities lose market share, it's because they are often not the best investments (especially inside of IRAs), not because they're being picked on.
I'm still wading through the proposal - which is long and takes several readings to appreciate. With that qualification (i.e. I may not know what I'm talking about), here are some responses to the article:
- "annuity retirement accounts [would be added] to the list of investments for which brokers [have to act as fiduciaries]"
Sure, and so would mutual funds, and anything else in an IRA. What's being changed is that if you get individualized advice on an IRA (or 401(k)), the adviser would now be considered a fiduciary, regardless of the investment. The proposal says:
Today, ... many ...advisers have no obligation to adhere to [fiduciary standards], despite the critical role they play in guiding ... IRA investments. Under [the Internal Revenue] Code, if these advisers are not fiduciaries, they may operate with conflicts of interest that they need not disclose and have limited liability under federal pension law for any harms resulting from the advice they provide. Non-fiduciaries may give imprudent and disloyal advice ...
With this regulatory action, the Department proposes ... a definition of fiduciary investment advice that better ... protects plans, participants, beneficiaries, and IRA owners from conflicts of interest, imprudence, and disloyalty.
The proposal goes on and on about how high cost funds are costing IRA investors a percent or more a year. I don't see any similar criticism of retirement annuities.
The underperformance associated with conflicts of interest--in the mutual funds segment alone--could cost IRA investors more than $210 billion over the next 10 years and nearly $500 billion over the next 20 years. Some studies suggest that the underperformance of broker-sold mutual funds may be even higher than 100 basis points, possibly due to loads that are taken off the top and/or poor timing of broker sold investments
- "The extra work required by the new rules ... would likely push brokers away from selling annuities and toward mutual funds and other fee-based investments"
The extra work imposed by the new regulations would apply to all IRA investments, so annuities wouldn't be disadvantaged. As a result of industry comments, DOL streamlined the regulations to reduce the overhead. DOL acknowledges compliance costs:
The Department nonetheless believes that these gains alone would far exceed the proposal's compliance cost.... For example, if only 75 percent of the potential gains were realized in the subset of the market that was analyzed (the front-load mutual fund segment of the IRA market), the gains would amount to between $30 billion and $33 billion over 10 years.
- "They feel the government is favoring mutual fund companies like Vanguard over insurers"
The proposed regs allow advisers to keep their front end loads, their wrap fees, etc. so long as they are reasonable under the circumstances.
Investment advice fiduciaries to IRAs could still receive commissions for transactions involving non-securities insurance and annuity contracts, but they would be required to comply with all the protective conditions [that apply to mutual funds]
One thing to keep in mind: the many kinds of deferred annuities "guaranteeing" 5, 6, 7% are not "bought" by consumers. Consumers are SOLD these things. They are way too complicated for anyone to just go out and request one. The opposite extreme are immediate, fixed annuities, which do have a place in some folks cash flow plans. And someday, these will have attractive rates once again. And also keep in mind that while the proposed regs have been written, the interpretation of the regs has not even begun yet. Just like the thousands of pages in the Dodd Frank act, it could take our friends in Washington months, if not years, to issue the how-to for this one.
One thing to keep in mind: the many kinds of deferred annuities "guaranteeing" 5, 6, 7% are not "bought" by consumers. Consumers are SOLD these things.
I learned very early on in my teaching career there was a big difference between a 40b(b) (IRA deferred annuity with loads, riders and fees) and a 403b(7) (IRA mutual fund account at low cost places like vanguard).
Vanguard never brought me lunch in the teacher's lunch room, but they continue to help fund my post-retirement parties.
it may be a distinction without a difference, but while Dodd Frank is a statute that calls for regulations to be written, the DOL regulations are just that - the next level of refinement (written regulations). In addition, the DOL regulations were subject to a three month public comment period (publication date April 20, 2015; comments closed July 21, 2015).
So while a comparison with Dodd Frank may not be apples and oranges, IMHO it's not a great comparison either.
I learned very early on in my teaching career there was a big difference between a 40b(b) (IRA deferred annuity with loads, riders and fees) and a 403b(7) (IRA mutual fund account at low cost places like vanguard).
I think you mean 403b(1), not 40b(b).
In any case, it seems you're confusing implementation with requirement. That is, each vehicle allows for a variety of different plans, good and bad. 403(b)(7) plans allow for load funds (not necessarily load-waived). And 403(b)(1) plans allow for very cheap, noload, straightforward annuities.
One really can't talk about 403(b)(1) plans without looking at the elephant in the room, TIAA-CREF. You're not going to get a stable value option paying 4% in any 403(b)(7). You're probably not going to have a loan option with a 403(b)(7), at least according to this description of 403(b) plans provided by New York State United Teachers (NYSUT).
A CREF VA is pretty much plain vanilla, no loads, and inexpensive (including the annuity fee) totaling less than 40 basis points for actively managed funds in some plans. Here's their prospectus (expenses are on p.8, pdf p. 11): http://www.tiaa-cref.org/public/prospectuses/cref_prospectus.pdf
That's not to say that all the wannabe annuity plans don't charge an arm and a leg, or that 403(b)(7) plans are typically high priced. Just that it's more the provider than the type of plan that matters. Even a Fidelity 403(b)(7) will likely cost more than a TIAA-CREF 403(b)(1).
Hmm...sorry...I fixed my typo...should've read 403(b) not 40b(b).
Here's is Vanguard's explanation of their 403(b)(7) plan which we, as teacher, fought tooth and nail to have our school system offer as an alternative to the many annuities options pedaled. These were always referred to as 403(b) plans.
From what I understand, this is just a proposal for rule making which will still need to be passed via Congress. The industry already scuttled the earlier 2010 proposal and they will try to do so again.
Consumers have no lobbyists (except perhaps Sen Warren). The entire financial industry is against it because it comes in the way of profits and/or increases liabilities.
Yes, this is a PR piece from the insurance industry and part of the lobbying going on.
Nobody in the industry wants a fiduciary clause and this has been the main point of lobbying efforts. Even if the industry wants to do right by the consumers (snickers), just nuisance lawsuits whenever people lose money that it invites will make it impossible to do business with any certainty. For every crooked broker/financial advisor, there will be 10 consumers who will not take responsibility and want to sue.
The lobbying algorithm in general usually goes something like this:
1. Try to scuttle a proposal if it works against you by completely dismantling it via popular opinion or political pressure. 2. If that seems difficult given the nature and backing, delay it as much as possible procedurally or by raising questions. 3. If no longer possible to delay it, start carving out exemptions and loopholes for your sub-industry 4. If the loopholes and exemptions aren't enough, repeat 1-3 above with the political process of enactment if that is the process.
This seems to be in stage 2-3 of proposed rule making with each one lobbying to get their own exemptions and the PR pieces are designed for it.
@msf is correct that there is no specific language for annuities or mutual funds. Yet. But part of the lobbying process is to get the special case exemptions in for yourself or proactively prevent the competing industry from getting theirs in. This PR effort from insurance company may be aimed at either or both of those goals.
As noted, in the worst case, mutual funds are simpler to satisfy fiduciary responsibilities than most annuities partly because of the structure and partly because of the commission based fee structure that is inherent in most annuities. This is what the insurance industry is spinning without mentioning why (as PR does).
The fiduciary responsibilities if it should come to that won't affect offering IRAs, only if there is a compensated arrangement where a broker/advisor selects or recommends investments or investment transactions for the consumer of that product. So the typical IRA structure most of us have where we do our own investment decisons and don't have any direct fee arrangement to make recommendations or decide transactions for us will not be affected even for the annuities that are available in these IRAs now. But the insurance industry wants their cash cows inserted into all managed IRAs and 401k plans and this is where the nature of the product comes in the way and makes it difficult for the advisors/brokers to take on fiduciary responsibility.
For lobbyists, that distinction between nature of the product and favors in rule making are the one and the same as long as they can get away with fudging it amongst those they want to influence.
I found this out when my paycheck was dinged for making a bi-weekly 403(b)(7) contribution and yet it took over 45 days for those funds to make it into my 403(b)(7) account. I inquired and discovered that a 401K plan have a fiduciary responsibility to make "timely contributions for the employees", no such language exists with 403(b) or 403(b)(7) plans.
Yes, that is my point, the final interpretations of the rules are not yet final. Rest assured once this gets to Congress, the lobbying dollars will take their toll. I do not for a minute think there are any politicians who are "lobbyists" for consumers, including Warren. They all want to be re-elected. And some of her proposals are more than a bit bizarre, but that is another topic. Just saying that, in their present form, the new proposals/regs/whatever could seriously injure the variable annuity industry. And that IS a good thing, since no one in the insurance and banking industry (and the vast majority of the retail investing industry) want any kind of fiduciary rule.
Congress generally isn't involved in the process of making regulations, unless it passes an explicit law to change a regulation. So lobbying Congress isn't particularly effective.
Once a law is passed, the executive branch takes over to implement that law. It does so by passing regulations (e.g. IRS regulations, as opposed to the Internal Revenue Code, which contains the laws). So long as those regs are consistent with the enabling law, they are okay, and appear in the Code of Federal Regulations (CFR).
@msf- Thanks for that... I was wondering how Congress could dive back in to the administrative details of an executive branch regulatory proposal that was operating under the umbrella of a general law (Dodd-Frank) previously passed by Congress. It seems to me that Congress would specifically have to re-visit and revise Dodd-Frank to seriously influence the regulatory process at this point.
@msf read the section titled "How is the Congress in involved in reviewing final rules?" in the link that you posted.
Things are never that simple especially in this political climate where anything one party does gets an automatic no vote by the other.
There will be lobbying to get the Congress to disapprove final rules even if they cannot override Presidential veto and especially if they can. But there will also be political lobbying to get the department proposing the rules via back channels to delay or do another round hoping for a more favorable political climate where a new President can scuttle the whole thing or water down the regulations sufficiently. Anything can happen in an election year.
Just as regulations are refinements of a law, Congress can "refine" its laws, like Dodd Frank, but it has to do so explicitly with new laws. Here's a NYTimes article from a year ago describing that approach:
Lawmakers approved by a vote of 250 to 175, with just eight Democrats in support, a broad measure to impose a variety of new restrictions on federal regulators, like stricter cost-benefit analyses and an expansion of judicial review. ...
House members also took up a narrower measure that would slow enforcement of Dodd-Frank requirements and weaken other regulations on financial services companies.
In the case of the DOL regulations, I believe their based on relatively ancient (1975?) laws, so tinkering with the statutes by Congress seems much less likely.
@msf read the section titled "How is the Congress in involved in reviewing final rules?" in the link that you posted.
There are regs that remain temporary for years or decades. Can't think of any now, but there are some well known IRS regs that were never made "final".
What the IRS says about those rules: "Temporary regulations are issued to provide immediate guidance to the public and IRS and Counsel employees prior to publishing final regulations. Temporary regulations are effective when published by the Office of the Federal Register. " https://www.irs.gov/irm/part32/irm_32-001-001.html
Edit: closer read - Congress must explicitly vote to disapprove the regulation. As you pointed out, if one party so votes, the other will oppose, so regs won't be disapproved. That's why the Republicans keep trying to pass REINS (Regulations from the Executive In Need of Scrutiny Act): https://www.congress.gov/bill/114th-congress/house-bill/427
@msf, I am not sure I understand you well enough but the congress according to the link you posted can scuttle the final set of rules with a disapproval with a majority enough to override a presidential veto, no? It would mean the department has to go back to the drawing board and create yet another set of dules which would suit the industry fine enough to delay it. Do you think this is not likely or not possible and if so why not?
I'll go along with OJ's comment, with one qualification - with a Congress and president of the same party, it is likely that the proposed regs from the executive branch would satisfy Congress. Congress would not oppose the proposed regs.
@old_joe, If you mean enough to override presidential veto, I agree.
But I was trying to differentiate what is procedurally possible with what is likely.
The difference between the two is what determines the lobbying efforts which attempts to influence the latter. Lobbying may simply try to delay it in an election year via back door channels into the department through politicians. Hoping for a new President who can help them by watering down the proposed rules itself in the next round with enough loopholes to make fiduciary responsibility moot.
But if the financial industry has enough Democrats in their back pockets, they can even try to get the congress and senate to disapprove this final set of rules with a veto overriding majority to send it back to the drawing board.
I am just not convinced that politician lobbying is left out of this loop in this set of rule making either procedurally or by trying to influence the final rule set.
I understand that @msf. I am asking a simple question. Can the congress act in a way that would prevent these final set of rules to go into effect as written finally? Not necessarily to get rid of them but send them back to the drawing board which at the minimum would delay it. If so, there will be lobbying efforts to do so. Any delay is better than the rules being enacted which would preserve status quo. Live to fight another day...
You are saying it has to pass new regulations which it is unlikely to do. The link you posted says it can simply create a disapproval of the rules as submitted and if it has enough votes to override a Presidential veto, then the final set of rules as submitted will not go into effect. It will not get rid of the regulations themselves but send it back to the drawing board. These are two different things and one is much more likely than the other with sufficient lobbying.
Again trying not to mix up what is procedurally possible with what is likely/unlikely.
Another point for your thoughts: Literally thousands of items in Dodd-Frank have yet to be interpreted by the appropriate government agencies. So while there may be some new reg, until the appropriate agency issues implementation/interpretation of what the regs actually mean, they sit on the shelf. There are many of them that apply to the investment advisory industry, but the SEC for example has yet to tell those of us in the trenches what we are supposed to do to be in compliance. In these circumstances, we simply state in our disclaimers that we have chosen to not have a formal (whatever) policy, since the SEC has not made it mandatory nor given instruction on how to implement it. It is crazy, but that is the overly-regulated world in which we operate.
And vkt, I agree with you that political lobbying is left out at any stage of rulemaking or interpretation. Al we have to do is see what happened when the SEC suggested a fiduciary rule for everyone in the financial industry was what Dodd-Frank intended. Lobbyists went bonkers and were successful in forcing the SEC to withdraw that proposal at the behest of the insurance, brokerage and banking industries.
I've been very distracted dealing with a health insurer, and (after a year of errors) am now filing a complaint w/state regulators - about a dozen pages, spreadsheets, email transcripts and summaries, etc. So I'm just now getting back to other stuff.
Regarding @vkt's question - Congress does not create regulations, it creates laws. Regulatory agencies then create regulations to implement those laws. So I don't see any distinction between Congress "getting rid of regulations" and sending them back to the drawing board. So long as there's a law to be implemented, there will be regulations from the executive branch to implement it.
If Congress doesn't like a regulation, it can change a law (or create a new law) to do as little or as much as it wants. For instance, the ACA created risk corridors to stabilize rates. If an insurer had particularly healthy customers, it would make a bigger profit, and some of that would go into a pool. That pool would be used to cover some (not all) of the unexpected expenses of an insurer that had bad luck. This was also intended to help stabilize rates until insurers got more experience with ACA.
Congress was silent on whether that pool was to be self-sufficient (i.e. not needing extra cash from the government), and the regulators (HHS) did not require it so as to help ACA get launched. Congress didn't like that, and in the 2015 "Cromnibus" bill, required risk corridors to be revenue neutral. Congress did not change the risk corridor law (that it had created in the ACA) in any other way, and did not tell HHS how to write the regulations. It was up to HHS to implement this new requirement (which it did by prorating payouts).
As to Dodd Frank, @BobC has called attention to what I wrote before - that it is up to the regulatory agency to say what the law is (until Congress passes a law that says otherwise). Dodd Frank is a law, not a set of regulations. The SEC creates regulations. As an "independent" agency the SEC is both more and less political than the DOL or other cabinet agencies. It is less political in the sense that it must represent both major parties. It is more political in that this makes it more susceptible to lobbying, since it isn't as beholden to one party's vision as are cabinet agencies.
Depending on an agency's structure, it may be more or less susceptible to lobbying - which is not to say that stops anyone from trying. How much sway have the banks had on Fed rates?
Comments
But there is one clause in there that if enacted/enforced would completely stop its sales through third party brokers - have fiduciary responspilibilities to customers. Does not matter what the product is, they would not want to sell anything where they would have to assume fiduciary responsibilities. They can be sued out of any returns they can make. This is worse in annuities where a significant amount of profits seem to come from overselling the product with fine print not well understood by the purchasers and often detrimental to their financial needs. This is what the annuity industry would be worried about.
If you want a "short" summary, here's the DOL fact sheet:
http://www.dol.gov/ebsa/newsroom/fsconflictsofinterest.html
My two line summary: Fiduciary responsibility will now generally apply to advice on IRAs (so if brokers intend to avoid that responsibility, they'll have to stop selling IRAs altogether, which won't happen), and virtually nothing gets special treatment or singled out. If annuities lose market share, it's because they are often not the best investments (especially inside of IRAs), not because they're being picked on.
I'm still wading through the proposal - which is long and takes several readings to appreciate. With that qualification (i.e. I may not know what I'm talking about), here are some responses to the article:
- "annuity retirement accounts [would be added] to the list of investments for which brokers [have to act as fiduciaries]"
Sure, and so would mutual funds, and anything else in an IRA. What's being changed is that if you get individualized advice on an IRA (or 401(k)), the adviser would now be considered a fiduciary, regardless of the investment. The proposal says: The proposal goes on and on about how high cost funds are costing IRA investors a percent or more a year. I don't see any similar criticism of retirement annuities.
- "The extra work required by the new rules ... would likely push brokers away from selling annuities and toward mutual funds and other fee-based investments"
The extra work imposed by the new regulations would apply to all IRA investments, so annuities wouldn't be disadvantaged. As a result of industry comments, DOL streamlined the regulations to reduce the overhead. DOL acknowledges compliance costs:
- "They feel the government is favoring mutual fund companies like Vanguard over insurers"
The proposed regs allow advisers to keep their front end loads, their wrap fees, etc. so long as they are reasonable under the circumstances. For the full set of DOL docs, see: http://www.dol.gov/ebsa/regs/conflictsofinterest.html
Vanguard never brought me lunch in the teacher's lunch room, but they continue to help fund my post-retirement parties.
So while a comparison with Dodd Frank may not be apples and oranges, IMHO it's not a great comparison either.
In any case, it seems you're confusing implementation with requirement. That is, each vehicle allows for a variety of different plans, good and bad. 403(b)(7) plans allow for load funds (not necessarily load-waived). And 403(b)(1) plans allow for very cheap, noload, straightforward annuities.
One really can't talk about 403(b)(1) plans without looking at the elephant in the room, TIAA-CREF. You're not going to get a stable value option paying 4% in any 403(b)(7). You're probably not going to have a loan option with a 403(b)(7), at least according to this description of 403(b) plans provided by New York State United Teachers (NYSUT).
A CREF VA is pretty much plain vanilla, no loads, and inexpensive (including the annuity fee) totaling less than 40 basis points for actively managed funds in some plans. Here's their prospectus (expenses are on p.8, pdf p. 11):
http://www.tiaa-cref.org/public/prospectuses/cref_prospectus.pdf
That's not to say that all the wannabe annuity plans don't charge an arm and a leg, or that 403(b)(7) plans are typically high priced. Just that it's more the provider than the type of plan that matters. Even a Fidelity 403(b)(7) will likely cost more than a TIAA-CREF 403(b)(1).
Hmm...sorry...I fixed my typo...should've read 403(b) not 40b(b).
Here's is Vanguard's explanation of their 403(b)(7) plan which we, as teacher, fought tooth and nail to have our school system offer as an alternative to the many annuities options pedaled. These were always referred to as 403(b) plans.
https://personal.vanguard.com/us/whatweoffer/smallbusiness/403b7employees
I did not know 403(b)(1) plans existed, but thanks for the additional info.
From what I understand, this is just a proposal for rule making which will still need to be passed via Congress. The industry already scuttled the earlier 2010 proposal and they will try to do so again.
Consumers have no lobbyists (except perhaps Sen Warren). The entire financial industry is against it because it comes in the way of profits and/or increases liabilities.
Yes, this is a PR piece from the insurance industry and part of the lobbying going on.
Nobody in the industry wants a fiduciary clause and this has been the main point of lobbying efforts. Even if the industry wants to do right by the consumers (snickers), just nuisance lawsuits whenever people lose money that it invites will make it impossible to do business with any certainty. For every crooked broker/financial advisor, there will be 10 consumers who will not take responsibility and want to sue.
The lobbying algorithm in general usually goes something like this:
1. Try to scuttle a proposal if it works against you by completely dismantling it via popular opinion or political pressure.
2. If that seems difficult given the nature and backing, delay it as much as possible procedurally or by raising questions.
3. If no longer possible to delay it, start carving out exemptions and loopholes for your sub-industry
4. If the loopholes and exemptions aren't enough, repeat 1-3 above with the political process of enactment if that is the process.
This seems to be in stage 2-3 of proposed rule making with each one lobbying to get their own exemptions and the PR pieces are designed for it.
@msf is correct that there is no specific language for annuities or mutual funds. Yet. But part of the lobbying process is to get the special case exemptions in for yourself or proactively prevent the competing industry from getting theirs in. This PR effort from insurance company may be aimed at either or both of those goals.
As noted, in the worst case, mutual funds are simpler to satisfy fiduciary responsibilities than most annuities partly because of the structure and partly because of the commission based fee structure that is inherent in most annuities. This is what the insurance industry is spinning without mentioning why (as PR does).
The fiduciary responsibilities if it should come to that won't affect offering IRAs, only if there is a compensated arrangement where a broker/advisor selects or recommends investments or investment transactions for the consumer of that product. So the typical IRA structure most of us have where we do our own investment decisons and don't have any direct fee arrangement to make recommendations or decide transactions for us will not be affected even for the annuities that are available in these IRAs now. But the insurance industry wants their cash cows inserted into all managed IRAs and 401k plans and this is where the nature of the product comes in the way and makes it difficult for the advisors/brokers to take on fiduciary responsibility.
For lobbyists, that distinction between nature of the product and favors in rule making are the one and the same as long as they can get away with fudging it amongst those they want to influence.
There has never been a fiduciary responsibility for 403(b) plans as far as I am aware.
Read here if interested:
How non-profit employers must structure their plans to avoid having their 403(b) plan subject to ERISA
https://asppa.org/Resources/Publications/Plan-Consultant-Online/PC-Mag-Article/ArticleID/5202
I found this out when my paycheck was dinged for making a bi-weekly 403(b)(7) contribution and yet it took over 45 days for those funds to make it into my 403(b)(7) account. I inquired and discovered that a 401K plan have a fiduciary responsibility to make "timely contributions for the employees", no such language exists with 403(b) or 403(b)(7) plans.
Once a law is passed, the executive branch takes over to implement that law. It does so by passing regulations (e.g. IRS regulations, as opposed to the Internal Revenue Code, which contains the laws). So long as those regs are consistent with the enabling law, they are okay, and appear in the Code of Federal Regulations (CFR).
Here's "A Guide to the Rulemaking Process" by the Office of the Federal Register:
https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf
And the classic, how a bill becomes a law (aka "I'm just a bill"):
Things are never that simple especially in this political climate where anything one party does gets an automatic no vote by the other.
There will be lobbying to get the Congress to disapprove final rules even if they cannot override Presidential veto and especially if they can. But there will also be political lobbying to get the department proposing the rules via back channels to delay or do another round hoping for a more favorable political climate where a new President can scuttle the whole thing or water down the regulations sufficiently. Anything can happen in an election year.
In New Congress, Wall St. Pushes to Undermine Dodd-Frank Reform (Jan 15, 2015) In the case of the DOL regulations, I believe their based on relatively ancient (1975?) laws, so tinkering with the statutes by Congress seems much less likely.
What the IRS says about those rules: "Temporary regulations are issued to provide immediate guidance to the public and IRS and Counsel employees prior to publishing final regulations. Temporary regulations are effective when published by the Office of the Federal Register. "
https://www.irs.gov/irm/part32/irm_32-001-001.html
Edit: closer read - Congress must explicitly vote to disapprove the regulation. As you pointed out, if one party so votes, the other will oppose, so regs won't be disapproved. That's why the Republicans keep trying to pass REINS (Regulations from the Executive In Need of Scrutiny Act):
https://www.congress.gov/bill/114th-congress/house-bill/427
But I was trying to differentiate what is procedurally possible with what is likely.
The difference between the two is what determines the lobbying efforts which attempts to influence the latter. Lobbying may simply try to delay it in an election year via back door channels into the department through politicians. Hoping for a new President who can help them by watering down the proposed rules itself in the next round with enough loopholes to make fiduciary responsibility moot.
But if the financial industry has enough Democrats in their back pockets, they can even try to get the congress and senate to disapprove this final set of rules with a veto overriding majority to send it back to the drawing board.
I am just not convinced that politician lobbying is left out of this loop in this set of rule making either procedurally or by trying to influence the final rule set.
You are saying it has to pass new regulations which it is unlikely to do. The link you posted says it can simply create a disapproval of the rules as submitted and if it has enough votes to override a Presidential veto, then the final set of rules as submitted will not go into effect. It will not get rid of the regulations themselves but send it back to the drawing board. These are two different things and one is much more likely than the other with sufficient lobbying.
Again trying not to mix up what is procedurally possible with what is likely/unlikely.
And vkt, I agree with you that political lobbying is left out at any stage of rulemaking or interpretation. Al we have to do is see what happened when the SEC suggested a fiduciary rule for everyone in the financial industry was what Dodd-Frank intended. Lobbyists went bonkers and were successful in forcing the SEC to withdraw that proposal at the behest of the insurance, brokerage and banking industries.
Regarding @vkt's question - Congress does not create regulations, it creates laws. Regulatory agencies then create regulations to implement those laws. So I don't see any distinction between Congress "getting rid of regulations" and sending them back to the drawing board. So long as there's a law to be implemented, there will be regulations from the executive branch to implement it.
If Congress doesn't like a regulation, it can change a law (or create a new law) to do as little or as much as it wants. For instance, the ACA created risk corridors to stabilize rates. If an insurer had particularly healthy customers, it would make a bigger profit, and some of that would go into a pool. That pool would be used to cover some (not all) of the unexpected expenses of an insurer that had bad luck. This was also intended to help stabilize rates until insurers got more experience with ACA.
Congress was silent on whether that pool was to be self-sufficient (i.e. not needing extra cash from the government), and the regulators (HHS) did not require it so as to help ACA get launched. Congress didn't like that, and in the 2015 "Cromnibus" bill, required risk corridors to be revenue neutral. Congress did not change the risk corridor law (that it had created in the ACA) in any other way, and did not tell HHS how to write the regulations. It was up to HHS to implement this new requirement (which it did by prorating payouts).
As to Dodd Frank, @BobC has called attention to what I wrote before - that it is up to the regulatory agency to say what the law is (until Congress passes a law that says otherwise). Dodd Frank is a law, not a set of regulations. The SEC creates regulations. As an "independent" agency the SEC is both more and less political than the DOL or other cabinet agencies. It is less political in the sense that it must represent both major parties. It is more political in that this makes it more susceptible to lobbying, since it isn't as beholden to one party's vision as are cabinet agencies.
Depending on an agency's structure, it may be more or less susceptible to lobbying - which is not to say that stops anyone from trying. How much sway have the banks had on Fed rates?