WASHINGTON -- Rep. John Delaney, who spent a career in financial services before running for Congress, joined President Barack Obama on Monday in calling for tougher regulations on brokers who help people plan for retirement -- offering his endorsement of a plan that is unlikely to sit well with some on Wall Street.
The Potomac Democrat, who is in his second term, spoke alongside U.S. Labor Secretary Tom Perez and Massachusetts Sen. Elizabeth Warren of Massachusetts before Obama announced the regulations during a speech at the AARP's headquarters in Washington.
Delaney, who founded and led a bank in Chevy Chase called CapitalSource before first running in Maryland's Sixth Congressional District in 2012, told the AARP that there are several solutions for dealing with what he described as the nation's looming retirement crisis.
"But the most obvious of these things, the most unassailable in my opinion, is to make sure if hard working Americans are setting aside some measure of their paycheck for retirement and seeking advice as to how to invest those funds that they are getting objective advice, free of conflicts and that their interests are being put first," Delaney said.
The proposal is likely to draw criticism from an industry Delaney has long been associated with. He received more campaign money from donors involved with securities and investments than any other industry, according to the non-partisan Center for Responsive Politics.
Opponents said the industry is well governed by financial regulators like the Securities and Exchange Commission. They say the Department of Labor is ill suited to write rules best left to agencies more familiar with the financial industry.
"You have the Department of Labor, which really doesn't know this area," said Ira Hammerman, general counsel for the Securities Industry and Financial Markets Association, the brokerage industry's big lobbying group. "Our concern is they are not going to get it right, just like they did not get it right in 2010."
The administration first proposed a regulation in 2010, but pulled it back following an industry outcry that the proposal would hurt rather than help investors by limiting choices.
The Labor Department proposal would require brokers to disclose to their clients any fees or other payments they receive for recommending certain investments. The effort has been largely spearheaded by Perez, another Marylander with significant political ties in the state.
The proposed rule, which could be months away from actual implementation, has been the subject of intense behind-the-scenes lobbying, pitting major Wall Street firms and financial industry groups against a coalition of labor, consumer groups and retiree advocates such as the AARP.
Under current rules, brokers are required to recommend only "suitable" investments based on the client's finances, age and how much risk is appropriate for him or her. The rules would make brokers handling retirement accounts obligated to put their clients' interests first.
The Associated Press contributed to this report.