The Dodd-Frank Act arose from the fallout of the Great Recession in 2008. Congress crafted this bill to reduce certain financial risks and help protect consumers. While everybody agrees that these are laudable goals, some critics say that certain portions of the legislation have hampered business growth in the USA. Because of these criticisms, the White House has appeared to support the repeal or replacement of certain sections of Dodd-Frank.
The Wall Street Journal recently reported progress made in Congress towards that goal. Basically, the new bill, called the Choice Act, focuses on reducing some oversight and disclosure requirements. It may also refocus and limit the powers of the Consumer Financial Protection Bureau. The Financial Services Committee has published the full text of The Choice Act on their official website. However, neither the House nor the Senate has voted upon this measure yet. This bill emerged from the Financial Services Committee and is expected to get voted on soon.
The Impacts of a Dodd-Frank Repeal on EmployersThis briefly summarizes some of the basic arguments for and against the repeal:
- Proponents of existing legislation say it helps protect all sorts of people who do business with the financial industry. They also say that required restrictions and disclosure requirements may protect taxpayers from having to provide funds for future bank bailouts.
- Detractors contend that some sections of the bill restrict financial companies so much that they are less likely to lend to riskier applicants and have trouble competing with foreign banks. In that way, it has been criticized for inhibiting the financial industry and small businesses.
How Might The Choice Act Specifically Impact Employers?
Of course, changes to current legislation may change the way that financial institutions conduct business. In addition, consumers may not be able to expect exactly the same protections that they might have grown used to in recent years.
There are also a couple of ways that The Choice Act may directly impact employers who must disclose compensation and administer certain benefits:
Executive Compensation Disclosures
One change may only impact larger companies that employ highly paid executives. According to Franczek Radelet, a labor-centered legal firm, changes to Dodd-Frank will impact the way that public companies have to make certain disclosures about executive compensation. Companies may also need to change the way they disclose the ratio between the average employee's salary and executive compensation. It's possible that these parts of the existing law could be repealed, allowing companies to keep this information out of their disclosures.
Employee Retirement Plans
Employers that offer retirement plans to their employees may also notice an impact. For instance, the Fiduciary Rule covers disclosures that investment advisors need to make to potential investors under certain circumstances. This rule requires that almost all advisors assume the role of a fiduciary. This means they must take extra steps to demonstrate that they put their clients' interests over their own.
Mostly, advisors will have to uncover any possible conflicts of interest, such as higher commissions from one investment product over another. It's possible that The Choice Act may seek to repeal some or all of this rule, and this could impact the way that retirement programs are selected and administered by some companies.
How Can ICS Help Your Business Cope With Changes to Dodd-Frank?
At ICS, we know that many of our clients count on us to help them proactively react to changes in laws that impact them. For example, we can supply compliance and legal staff. These professionals will help your company make reporting decisions that comply with the law and are in your company's best interests. In addition, our talent pool of human resources professionals will make sure that your company administers and offers retirement plans that offer both your business and your employees the best value.
In today's rapidly shifting economic and political climate, your business can rely on a partner like ICS. Visit our contact page to find one of our national offices.