Warren Blasts Labor Regulator Over Delayed 401(k) Banking Rule

The Labor Department may be “granting favors to the financial industry” by re-opening and extending the comment period on a proposed retirement plan asset manager rule, Sen. Elizabeth Warren said in a letter to regulators first obtained by Bloomberg Law.

Warren has supported strengthened protections the Biden administration proposed on major banks that seek to bypass worker benefit laws. She said in the letter dated Monday the Employee Benefits Security Administration repeatedly granted corporate interest groups’ requests for additional time to comment despite “no adequate rationale.”

“Finalizing this amendment is an opportunity to send a clear message that powerful financial institutions should not be granted special favors and allowed to manage workers’ retirement accounts if they engage in criminal actions,” the Massachusetts Democrat wrote.

EBSA’s proposal (87 Fed. Reg. 45204) would clarify the rules surrounding qualified professional asset managers, or QPAMs, which are major financial players considered robust and independent enough to get a pass on conducting many of the myriad day-to-day prohibited transactions that retirement plans face.

Not only would foreign convictions continue to be disqualifying under the plan—rebuking a Trump administration attempt to deregulate—but the department also would institute a loss of QPAM status for deferred or non-prosecution agreements and making false or misleading statements to investigators. It would set a higher bar for many banks to qualify as QPAMs, widely considered a gold standard for asset managers to conduct business.

The department first extended the initial comment period for the rule in September at the request of American Bankers Association and American Retirement Association, Warren’s office said. Then in March, regulators reopened the comment period completely, this time at the request of the American Benefits Council and the Coalition of Collective Investment Trusts, according to the letter.

Amid those delays, which Warren said are inconsistent with the proposal’s intent, EBSA has granted several individual exemptions to banks that ran afoul of the current QPAM rule. Citigroup Inc., and JPMorgan Chase & Co. are among those recently granted exemptions, despite their convictions in foreign market price-fixing schemes.

“Your proposed amendment to the QPAM Exemption should address these loopholes that have allowed corporate wrongdoers to continue conducting business as usual despite their blatant criminal misdeeds,” Warren said in her letter.

The Labor Department didn’t immediately respond to a Bloomberg Law request for comment late Monday.