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Obama Enacts Two Major New Wall Street Regulations

| by Robert Fowler
President Barack ObamaPresident Barack Obama

President Barack Obama has used executive orders to implement a consequential set of new financial regulations. Through both the Department of the Treasury (DOT) and Department of Labor (DOL), the Obama administration has taken a stiff stance against corporate tax inversions and how brokers give retirement advice.

Following the revelations of the Panama Papers, which detailed billions of dollars in potential tax revenue being stored in offshore accounts, President Obama had pledged tough action on tax inversions, USA Today reports.

Corporate tax inversions occur when a large U.S. company merges with a smaller foreign company, and then lists the latter company's location as its base of operations. This allows American corporations to enjoy the privileges of U.S. commerce without having to contribute its full share of taxes.

“It sticks the rest of us with the tab, and it makes hard working Americans feel like the deck is stacked against them,” President Obama said.

The DOT released a slew of regulations that include removing domestic tax benefits for corporations that use tax inversions and by targeting the core benefits of merging with an overseas company.

The new inversion regulations have already killed an impending merger of U.S. drug company Pfizer with the Ireland company Allergan, a deal that was estimated to be worth $160 billion.

The other major regulation was issued by the DOL, forcing brokers to put the interests of their clients before their own bottom line when it comes to retirement advice.

By requiring that brokers, exercising what is known as fiduciary duty, adhere to strict guidelines when advising clients, the Obama administration has touted the regulation as an effort to save Americans from billions in unnecessary investments.

“Today’s rules ensures that putting clients first is no longer a marketing slogan,” said Labor Secretary Thomas Perez, according to Bloomberg. “It is the law.”

The fiduciary regulation is considered the biggest retirement reform since the introduction of the 401(k) in the 1970s.

Director of financial security Cristina Martin Firvida of the American Association of Retired Persons praised the Obama administration for introducing the regulation, declaring “This was a legacy moment,” The Hill reports

Both the inversion and fiduciary regulations were signed by executive order, making them vulnerable if a Republican candidate inherits the White House.

Republicans in Congress have already vowed to challenge the fiduciary regulation. In a statement House Speaker, Republican Rep. Paul Ryan of Wisconsin vowed, “We will continue to look at every avenue to protect middle-class families and small businesses from government overreach.”

The Obama administration is also attempting to put forward measures that more than double the salary threshold for overtime pay from $23,660 to $50,440 as well as enforcing new nutritional labeling that will target the amount of sugar used in packaged foods, The Wall Street Journal reports.

Sources: Bloomberg, FortuneThe Hill, USA TodayWall Street Journal / Photo Credit: Gage Skidmore/Flickr

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