February 3, 2025 • 36 mins
“There’s a little bit going on here in [Washington] D.C.,” American Retirement Association CEO Brian Graff quipped at the outset of the latest episode of D.C. Pension Geeks. “We have a great guest to help us figure out what’s going on.”
Indeed. Brad Campbell, former Assistant Labor Secretary for the Employee Benefits Security Administration (EBSA) and currently a Partner with legal powerhouse Faegre Drinker, joined Graff for a frank discussion of what’s ahead for retirement plans in the second Trump Administration, and where we are withy the fiduciary rule, ESG, litigation reform, alternative investments, and more.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
My point is, though, what the late what Employee
Benefits Security Administrationmight say about investments in
private equity.
I think we're likely to see amore positive stance, but how
big an issue that is, I think,will depend in part on who's
sitting in the seat as the EPSAassistant secretary and how much
they personally want to work on.
Speaker 2 (00:21):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:41):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:47):
All right, everybody, it's 2025, and I'm a little bit
behind the eight ball here, soit's time to catch up with some
new DC Pension Geeks, podcasts,and there's a little bit going
on here inC, and we've got agreat guest to help us try to
figure out what's going on,what's going to happen with the
(01:09):
new Trump administration Noneother than the Honorable Brad
Campbell, the former assistantsecretary for the Employee
Benefit Security Administration,the administration and Brad has
got an incredible resume timeworking for the Department of
Labor.
He was also on Capitol Hill asa legislative director has both
(01:42):
a background in labor issues,but also did his fair share of
tax issues as well.
We're very fortunate to havehim with us today, so thank you,
brad, for joining me today.
Speaker 1 (01:52):
Hey, thank you for the invitation.
I mean when the man, the myth,the legend, brian, gives me a
call.
I got to show up.
Speaker 3 (01:59):
Well, you know, I think my kids would refer to me
mostly as myth, but anyway, Ithink my kids would refer to me
mostly as myth, but anyway.
So we like, as everyone knows,we like to talk a little bit
about you.
Know how you became a pensiongeek, so how did you end up in
this wonderful world we callERISA?
Speaker 1 (02:17):
Well, I think you're right.
No one out there grows upwanting to be a pension geek, an
ERISA lawyer, a tax lawyer, anyof those kinds of things.
It's one of those things youjust somehow find your way into.
In my case, as you say, I wasworking on Capitol Hill and I'd
been doing tax issues, so I wassomewhat adjacent to the
employee benefit space for thenCongressman Chris Cox, later the
(02:38):
SEC chair, and I got a job, asyou said, being legislative
director for a freshmancongressman who had come in,
ernie Fletcher.
Dr Ernie Fletcher, who was,though, a freshman, he was a
medical doctor, and at thatpoint in Congress in the late
90s, we were involved in thepatients' Bill of Rights fights.
So it was all about health carereform, particularly the ERISA
(03:01):
aspects of health care,particularly the ERISA aspects
of health care, and so I reallygot into ERISA in the first
place through the health caredoor by working with him on that
legislation and, effectively,about the time the health care
debate was sewn up andultimately no bill happened,
which wasn't a bad outcome forthat particular bill.
Around that time the Bushadministration had just started
(03:24):
and Enron happened, and so Ikind of went over to the
Department of Labor with theBush administration and because
of Enron and really pushingthings, even though I went over
there originally for more of ahealth benefits focus.
I ended up liking and reallyfocusing more on retirement
plans.
So since roughly 2001, I'vebeen focused more on the
(03:46):
retirement plan side of things.
Speaker 3 (03:48):
It's like a bug you get bit and people just don't
want to stop doing it.
That's a very common story.
There's something about thisretirement policy.
I think you feel like you canactually make a difference and
do some good, and that'sprobably what drives a lot of
people behind it.
Speaker 1 (04:06):
Well, I have to say that is something that I, you
know, I've had a verynon-traditional legal career.
I went to a law firm after Ileft the government.
I was never an associate ornever went through that
traditional law firm careerroute, and I don't regret that
at all.
I really enjoyed my timeworking in public policy.
The final job I had in thegovernment the Assistant
Secretary of Labor for EmployeeBenefits was the best job I've
(04:29):
ever had.
I really, as you said, I feltlike we were doing something
that really mattered.
We were trying to solveproblems that help people retire
and you know, I feel like somereally good things.
I'm not saying just for me, butfrom our time there and what
had happened with the PensionProtection Act and implementing
the regulations for QDIAs, Ijust feel like we got to be
(04:49):
there at a time.
I got to be there at a timewhen important things happened
and I really enjoyed being apart of it.
Speaker 3 (04:55):
Yeah, there was a lot going on during that period of
time and I think you know it was.
That was sort of a period oftime, both of us having been
doing this for unfortunately waytoo long.
Um, what that I describe as the, as the, as the period of, of
generally general harmony, andwhat I mean by that is people
(05:17):
generally saw what we were doingwas, you know, good work,
wasn't overly controversial.
Uh, no, you, Nothing was reallymaking waves.
It was more like, hey, we'remaking some changes to make the
system better and, frankly,since the end of that
administration, starting withsome of the work in the Obama
(05:42):
administration, obviously withthe first iteration of the
fiduciary rule, we've certainlygot stuff that's a lot more
controversial.
I guess to some degree weshould be.
I don't know, happy is not theright word, but at least we're
getting paid attention to nowmore than we were doing back
(06:04):
then.
It was hard to get anybody'sattention about retirement,
certainly way back in the 90swhen I first started, but
obviously we got to start withthat first question, right, you
know what's going to happen withthe fiduciary rule again.
Speaker 1 (06:23):
Well, we are waiting to see, and I wish I had a
better answer than that, butthat is.
That is the situation.
So, as you said, we had thevery first version which the
Obama administration proposedback in 2010, 2011.
And at that time, there wasuniversal agreement.
Republicans and Democrats,everybody hated the initial
proposal.
That's true.
Really wasn't any question.
Speaker 2 (06:44):
Capitol.
Speaker 1 (06:45):
Hill hated it, you know, and it was kind of a
Department of Labor onlyinitiative at that time.
So they went back and retooledit and a couple of years later,
due to changes in variouspersonnel throughout the Obama
administration, it went frombeing this DOL idea nobody liked
to suddenly being a reallyimportant idea at the White
House, and so they promoted itand in 2015, they came back with
(07:08):
a fiduciary rule that actuallymade it to the finish line and
became a final regulation andreally radically, in my view,
tried to change the scope of thedepartment's jurisdiction to
not just be over ERISA plans youknow the plan sponsor agenda
but also over the retail side ofindividual retirement accounts.
And I think that's really wherethe controversy centers on is
(07:33):
not the issue of should I be afiduciary when I tell a plan how
to invest?
Yeah, I think there's prettymuch universal agreement among
at least all the majorpolicymakers, not saying the
entire world but yeah, yes,fiduciary advice should include
people telling plans how tostructure their 401ks, et cetera
.
The question is should thatextend to participants who are
(07:53):
rolling over to IRAs?
Should that extend to theinternal management of IRAs?
Should that extend to adistribution from an IRA to buy
an annuity or something of thatnature.
And that's where there's becomea split, where the Obama folks
first went down that path ofexpanding it.
That was, of course, litigated.
We went to the Fifth Circuit.
The Fifth Circuit said no tothe rule.
(08:14):
In between, the first Trumpadministration came into office
and they kind of delayed therule, but they let it partially
go into effect and then thecourt decision came and the
fiduciary rule was dead.
That was round two.
What I think people forget whenthey say what's going to happen
next?
Surely the Biden rule, which wehaven't gotten to yet.
Speaker 3 (08:36):
Deja vu.
Well, we're deja vu all overagain, right?
Speaker 1 (08:40):
Yeah, we're in the same position.
The Biden administration cameout with a rule and the Trump
administration's in a positionto decide what happens to it in
the courts or in the agency, andI think it's instructive to
remember that the first timethis happened, in the first
Trump administration, the courtcase was won by the opponents of
the fiduciary rule.
The Fifth Circuit vacated theObama-era rule, and so the issue
(09:03):
was effectively dead.
It was actually and I thinkpeople tend to forget this it
was actually the Trumpadministration who resurrected
in a different form, 2020 or two.
Yeah, key parts of the Biden ofthe Obama era rule as an
interpretive guidance in thefront of a prohibited
transaction exemption and it wasa really weird process because
(09:25):
the preamble to an exemptioncontained a bunch of new policy
that was unrelated to the textof the exemption but told you
how to interpret an original1975 regulation that was not
directly part of the exemption.
It was a weird affirmative actby the Trump administration in
policy.
Speaker 3 (09:44):
Well, but they needed to say something.
I mean because there werequestions that had to be
answered, and I think they didit in a way that, for the most
part, most of the people in theindustry thought it worked okay.
Speaker 1 (09:56):
Well, I think there's some room for debate on that.
Let's remember that parts ofthat guidance were immediately
challenged in a district courtin Florida and in a district
court in Texas.
Speaker 3 (10:06):
Not the new 2020-02, the old 2020-02.
Speaker 1 (10:11):
Right, the old 2020-02, which is where the
Trump administration sort ofresurrected rollover as
fiduciary advice of their ownmotion.
Speaker 3 (10:19):
The Deseret, repealing the Deseret rule.
Speaker 1 (10:21):
Yeah, they repealed the Deseret advisory opinion and
then they replaced it with thisnew guidance, my favorite part
of which was later struck downby this Florida district court.
But my favorite part of whichwas where they said if you and a
advisor meet, you an individualand an advisor meet and you've
only met once, but you intend tomeet again in the future to
(10:43):
have more advice provided afterthe rollover.
And it meets the regular basistest.
I was paying my membership.
It's your New Year's resolution.
Speaker 3 (11:09):
My New Year's resolution is to continue giving
advice.
All right.
So if you had to predict,because presumably the Fifth
Circuit is going to vacate thisrule and certainly there will be
no reason not to, because thenew administration is not going
to defend the rule Um are we?
(11:29):
Where are we going?
Speaker 1 (11:31):
Well, so that that, again, is why I think, looking
at the last Trump term, last thefirst Trump term, the first
Trump administration, isinstructive, because even though
that issue was dead, theyresurrected parts of it, which
indicates at least at that timethey had a policy preference for
some aspects of expanding notthe full scope of expanding
fiduciary status to rolloveradvice, et cetera.
(11:54):
And so then the Bidenadministration put out a much
more detailed and comprehensiverule, and that's what's being
litigated now is the challengeagainst the Biden
administration's broader rule,and again it's fallen.
Litigated now is the challengeagainst the Biden
administration's broader rule,and again it's fallen to the
Trump administration to decidewhether to defend it in court or
to replace it or some othermeans.
And I think the short answer isI think they probably will be
(12:17):
taking the position in the nearterm that they don't have to
decide, to decide right, becauseright now, where it sits, the
Fifth Circuit is hearing anappeal on the narrow issue of
whether the stay of theeffective date of the 2024
Biden-era rule, in other words,should the rule, ever go into
effect.
That is what the Fifth Circuitis deciding.
(12:38):
If they decide that the stayswere valid, then we go back to
the lower court to actuallystart litigation over whether
the rule is valid.
So unless the Fifth Circuitdecides to lift the stay which I
tend to agree with you, I thinkis unlikely Unless they decide
to do that, then we're going tohave ongoing litigation and no
immediate Probably at least twoyears, maybe even more.
(13:03):
Yeah, and so I think the bettingis that the Fifth Circuit will
rule, maybe by summer-ish.
Speaker 3 (13:10):
Just on the TRO issue .
Speaker 1 (13:11):
Just on the stay issue.
Right, yeah on that.
And so even if the FifthCircuit decides, nope, we're not
going to uphold the stay, we'lllet the rule go into effect.
That would be a precipitatingevent where the Trump
administration will have to thentake an action to either change
what the substance of the ruleis or extend the effective date
(13:31):
while they decide to change thesubstance.
Speaker 3 (13:35):
And the impact of the stay was to go back to the
prior 2020-02.
Speaker 1 (13:42):
That's true as modified by the loss in Florida
of that anticipated ongoingrelationship.
Speaker 3 (13:48):
the court basically said you can't count advice in
Ireland, at least in that areaof the country, I guess,
arguably, who knows Well?
Speaker 1 (13:59):
actually no, because in that case DOL did not
challenge the ruling, theydidn't appeal the ruling of the
district court in Florida.
So that actually stands.
I think that part of theguidance.
Speaker 3 (14:12):
I guess there's a question of how, if they wanted
to, one could see them comingback and saying old 2020-02 as
modified as you're suggesting,because you know that's going to
be there.
They're going to be tendingtowards that direction anyway.
Speaker 1 (14:28):
I think that's that all of this was a really long
build up to.
What will they actually do?
I mean, the first is they haveto decide their.
They, the Trump administration,have to decide their posture,
and how vigorously are theygoing to defend a Biden rule
that they probably don't agreewith in all, the details that
they're not going to do.
But they might have sympathyfor some of its aims.
(14:49):
So if you know the course ofthe-.
Speaker 3 (14:53):
Yeah, I think what I've been telling people is as
long as you're still, stick with2020-02,.
Speaker 1 (15:00):
You know, as you were dealing with that before
2020-02, as you were dealingwith before, no-transcript,
unless the Trump folks do decideto, let's say, use the court
process to withdraw the rule andthen replace it with something
(15:23):
else.
But no, you can't predict that,really.
No, are you kidding me?
I mean, I think it's anunlikely outcome, but it is
possible.
Speaker 3 (15:35):
No, I'll take that bet.
Speaker 1 (15:37):
Your bet is nothing happens until after this term of
the Trump administration.
Speaker 3 (15:42):
Until there's another administration.
I don't think thisadministration is going to other
than saying we don't supportthe Biden rule and going back to
the way we had it before withthe modification that we talked
about.
No, there's no way they want totouch this with a 10 foot pole.
Speaker 1 (16:04):
Hey, I would take that outcome, I hope.
Speaker 3 (16:06):
I'm I feel very confident about that.
I mean, you know, republicansare objecting to the ESG rule,
which actually isn't that bad.
I mean so the idea that theywould take on this issue.
Considering how polarizing itis, I would strike me as
incredibly odd for them to wantto take this on.
Speaker 1 (16:28):
Well, you mentioned before how there was this kind
of period of harmony inretirement policy in the past.
I actually think it's stillrelatively true.
I think compared to many otherareas, retirement policy is a
lot less that's fair, that isfair.
But to your point-.
Speaker 3 (16:44):
Certainly on the legislative side, is much more
so than it is on other issues.
Speaker 1 (16:49):
Yeah, but certainly to your point, there are a
couple of what have become hotbutton issues, and when you
reference ESG, I think that isgoing to be the hot button issue
in the ERISA space, where weprobably are looking at
regulatory changes.
We probably are looking at moredetailed executive orders than
we've seen thus far, and I haveto agree with you, and this is
(17:13):
this is why I would like to sayI think I've been pretty even
handed in my criticism of theObama, biden and Trump
administrations, of the lastthree administrations.
I actually think the Bidenadministration did a pretty good
job on getting a fairly neutralinvestment decision-making rule
that we call the ESG rule,although it's actually a lot
(17:33):
broader than that and we agreewith you on that.
Speaker 3 (17:35):
I mean, as we publicly have said, that the
rule, notwithstanding all thecontroversy, if you actually
read the rule, which apparentlynobody does, it is very balanced
.
Speaker 1 (17:49):
Yeah, it basically says fiduciaries can consider
these factors where they areessentially relevant to the
economic analysis, but in noevent can they sacrifice returns
or increase risks to achievecollateral objectives.
Speaker 3 (18:01):
You could say that pretty much about anything.
Speaker 1 (18:04):
That's a pretty straightforward analysis that
allows you to take into account,say you know, the economic
realities of a heavy pollutionindustry which faces litigation
risks and regulatory risks.
Nobody would dispute that youshould take that into account.
But it also allows you to say,yeah, we're not going to invest
(18:26):
in the fund that only invests ingreen energy and doesn't care
how much money it loses.
That's not a starter for anERISA plan, and I think the rule
as we have it actually does theright balance there.
That said, I think thatregulation is very much going to
be front and center, and Ithink the recent American
Airlines decision is just goingto pour some fuel on the fire
for this debate.
Speaker 3 (18:46):
So let's.
So I'm glad you brought that up.
Not so much about ESG, which Iagree with you that you know
they're going to have to decidehow they want to deal with the
litigation in the Fifth Circuit.
Deal with the litigation in theFifth Circuit which, unlike the
fiduciary rule, the FifthCircuit seems to be leaning
(19:08):
towards actually upholding therule.
But we'll see Litigation ingeneral.
There is obviously continuingconcerns from a policy
standpoint about theproliferation of lawsuits
against ERISA plans now bleedinginto the health space.
(19:30):
In our capacity, now that PSEAis part of ARA, when we do focus
groups with large and megaplant sponsors, they repeatedly
say to us their number one jobis not to get sued.
They won't consider anythinginnovative because their number
(19:55):
one job is to make sure thattheir plan, their employer,
doesn't get sued.
And it's just, frankly, it'ssad and even more so it's having
a chilling effect on anyinnovation because there's such
a reticence on the part of theseplant sponsors to do anything
(20:16):
innovative out of fear of alawsuit Is there, you think?
Speaker 1 (20:28):
is there some climate in the new administration to
try to do something about it?
I think there is, but I thinkultimately it's going to depend
on which officials sit in whichseats, and many of those we just
don't know yet.
And so I agree with you, Ithink this area is one the wave
of class action litigation and,let's just be upfront, there's a
very evil synergy between theclass action and the contingent
(20:49):
fee.
Right, if I can come on behalfof a participant and make an
argument that a multi-billiondollar pension plan had a
fractional percentage of anerror, that adds up to a big
pile of money that I can now,you know, for the cost of
writing up a complaint and doinga little research and then
starting to do some discovery.
Speaker 3 (21:08):
And, from what I understand, a lot of these cases
are.
A lot of these cases are fundedwith angel investors or, you
know, venture capitalists, andand they're they, they they see
it as a you know, as aninvestment opportunity.
It has nothing to do with thesubstance of the case, it's just
business.
They're filing enough of thesecases that they're going to get
a return based on 30%, 33%awards.
Speaker 1 (21:33):
That makes it very lucrative from a business
standpoint this standpoint andunfortunately for the plan
sponsor, the ABC company thathas the billion dollar plan.
Even if they're 100% in theright and have no questions
about how well they did theirjobs as fiduciaries or their
fiduciary committee did its job,they have to do the green eye
(21:53):
shade accounting as well and say, okay, well, we could spend 15,
$20 million defending ourselvesand proving that we were right,
or we could pay $8 million andmake these guys go away and the
lawyer gets 3 million.
The participants get usually notmuch in terms of practical
advantage and sort of thatsystem rolls on, as you said, as
(22:16):
a business, which I think isunfortunate.
That's not what the classaction should be doing, and so
I'm with you.
I think we do need and I thinkthere could be some very
effective things that the Trumpadministration could do, if you
look at some of the commontrends in ERISA litigation the
last five or 10 years good clearregulatory action or good clear
(22:40):
guidance, not just through theamicus brief program where the
government comes in and statesits views in a particular case,
but some broad-based guidancecould clear up ambiguities that
are being exploited in some ofthese cases, for example, the
recent wave in forfeiturelitigation.
That's a place where one I thinkactually Treasury, irs and
(23:02):
labor have all said fairlyclearly that this is not an
impermissible use of forfeituresto offset employer
contributions and I think ifthere was some additional
clarity on that it would reallyshut down the viability of some
of those cases and I thinkthere's several One would think,
although sometimes courtschoose to ignore that clear
(23:22):
guidance regardless.
That is true, but it would behelpful, I think, if the-.
It would certainly be helpful Ifsome of those issues were sort
of tackled head on with an eyetowards how do we close down
some of the common areas oflitigation where really it is
abusive and not about protectingparticipants.
I think there could be somevaluable ground gained there.
Speaker 3 (23:45):
What do you see as other priorities?
What about alternativeinvestments?
Speaker 1 (23:51):
Yeah, well, I think we have some pretty clear
indications that the Trumpadministration is in a very
different place on things likecryptocurrencies than the prior
administration was.
You've got the SEC taking somevery direct action.
You've got now a crypto czar Ithink the term was at the White
House and ultimately that willalso reflect back on DOL.
(24:12):
You know, as I'm sure many ofour listeners here recall the
Department of Labor what fouryears ago now put out, three
years ago put out what theycalled guidance, but I like to
think of as a glorified pressrelease that basically, to use a
sports analogy- it was abrushback.
Speaker 3 (24:30):
I think they called it a compliance assistance
bulletin.
Speaker 1 (24:33):
Yes, that's what it was.
It was the new thing theycreated recently the CAR, the
Compliance Assistance ReportBulletin.
Is it a cab and not a car?
Anyway, there've only been twoof them.
So you know, maybe I justhaven't internalized the acronym
yet, but in that they reallytook some very vague language
(24:55):
and said we're concerned aboutyou.
Know, fiduciaries are allowedto invest in all sorts of things
, or very few restrictions onwhat's a permissible investment.
But here are, you know, eightreasons why we don't like crypto
, and we're suggesting to youthat if you do this crypto stuff
, we will likely investigate you.
And that, by the way, isn'tjust for cryptocurrencies,
(25:20):
that's for cryptocurrency andcrypto related investments.
As though there's no differencebetween an index fund of a
basket of crypto related issuesas opposed to buying one
security or whatever it is youcall a cryptocurrency.
Maybe it's not a security.
I'll leave that to thesecurities lawyers to fight that
out.
Speaker 3 (25:39):
I'm pretty sure it included the Trump meme coin.
That much I know.
Speaker 1 (25:43):
Yes, and that would certainly be true.
And the other thing is they, inthat same guidance, again
brought up this issue, which hasbeen plaguing us with Labor
Department guidance for a while,where they tried to imply that
there's a fiduciary obligationto prudently select and monitor
everything that's availablethrough the brokerage window,
(26:03):
not just the window itself.
Even though their regulationsclearly state a brokerage window
, what's available through thewindow is not a designated
investment alternative subjectto those rules.
So again they suggested well,if your brokerage window allows
some investment incryptocurrency, that might be
imprudent and will investigateyou.
I think they had to take somesteps back on that.
I think, actually, if I recallit was in an interview with you
(26:26):
that Tim Houser, the head,career, clarified.
Clarified, some might say,walked back some of those
statements.
But my point is this was a longrambling diversion.
My point is that I think we sawa very anti-crypto and similar
private equity stance by theBiden administration.
(26:47):
In the prior Trumpadministration we saw some
proactive steps.
There was some guidance theyput out on private equity
investments.
That was limited but still sortof provided some narrow avenues
.
Speaker 3 (26:59):
Open the window a little bit.
Speaker 1 (27:01):
Yeah, I wouldn't call it wholehearted embrace, by any
means it had a lot oflimitations on it, but it was
sort of a.
Speaker 3 (27:09):
Would you expect this , you know, trump 2.0 to be a
little bit more?
You know?
Speaker 1 (27:17):
more welcoming.
Let's put it that way I do theimpression that I get and
ultimately again we'll just goback to this mantra that we
don't yet know who's going to bein which seats.
So that will affect a lot ofthis level of guidance, where
it's not coming out of the WhiteHouse but it's coming out of
one of the Department of Labor'ssub-departments, this one might
actually be pushed out of theWhite House.
(27:37):
Well, this one might have itsown executive order governing,
right, own executive ordergoverning.
But my point is, though, whatthe late, what Employee Benefits
Security Administration, mightsay about investments in private
equity?
I think we're likely to see amore positive stance, but how
big an issue that is, I think,will depend in part on who's
(28:00):
sitting in the seat as the EPSAassistant secretary and how much
they personally want to work onit.
Got it?
But I think it's definitely saidyou know the new leadership and
looking at the SEC, for example.
I think it's definitely saidwe've been doing some things
here that we want to review,treat differently Plus the.
Sec just recently lost in courton its refusal to engage with
(28:21):
some crypto.
Speaker 3 (28:23):
And also, you know I think it'll, at least when it
comes to crypto.
I continue to be of the viewit's going to be hard to
consider the ERISA planimplications until the
regulatory framework at thefederal level has been set up,
and you know that still hasn'thappened yet.
Speaker 1 (28:43):
I would certainly agree with that.
So I would say, regardless ofwhat you think or don't think
about crypto in terms of itbeing gambling versus investing,
you're right.
I think what the SEC is puttingin motion is a way to approach
it as sort of a legitimate areawhich we're going to regulate,
as a legitimate area which isdifferent in terms of how the
(29:04):
government has approached it thelast four years.
Speaker 3 (29:09):
Last question Secure 2.0, we're still implementing,
and I think this is sort ofrelated.
I'm going to kind of weave twothoughts together here.
Obviously, the Department ofGovernment Efficiency,
Republicans in the House, arevery interested in trying to
(29:29):
reduce the size of government.
You know, you're aware, notonly from a budgetary standpoint
, but you know there areproposals to incentivize current
workers to leave that are outthere.
Are you concerned about thebandwidth at the agency to be
(29:50):
able to deal with either theissues we've talked about or
with Secure 2.0 implementation?
Speaker 1 (29:56):
Yes, frankly I am.
I mean I'm not saying thattranslates into we should
definitely have, you know,bigger agencies and more
government.
I'm not saying that translatesinto we should definitely have
bigger agencies and moregovernment.
I'm not saying that.
But I think we have seen at IRSand DOL that they have been
much slower to process like onthe IRS side, determination
letters, all those normal thingswe do to interact with the IRS,
(30:19):
epcurs, and all of that istaking longer and is causing
some consternation that therejust isn't the bandwidth over
there to do the things thatroutinely need to get done At
labor.
I've seen it manifested more inthe investigation side of
things.
I got interested in this afterthe you know, the help not the
(30:40):
help committee, the houseeducation, the workforce
committee started looking atsome of DOL's investigations and
so, just of my own interest, Iwent back and looked 10 years
ago versus now.
How many civil investigationsand criminal investigations was
the agency closing?
You know how is that workingand generally what the numbers
show.
And just to not have one yearbe an anomaly, I looked at four
(31:02):
years from 2010 to 2013,compared to four years 2020 to
2023, which is the most recentyear for which the data is
available 23.
And it showed a 78% reductionin civil cases closed.
It was about a 36% reduction incriminal cases closed.
(31:27):
There's been the question thatthen raises is well, does that
mean they're just doing fewercases?
And that's not been myexperience.
My experience as a practitioneris they're doing the same
amount of cases, they just takelonger.
The only data we've really seento back that up is from a GAO
report where they looked at theclass of 2017 cases that EBSA
opened and four years later, oneout of six was still open.
(31:47):
So that tends to suggest it's agrowing backlog.
But we can't see that from thepublicly available data, so I
just hold that out as an exampleof where I do think there are
bandwidth agencies.
If you look at DOL, they willsay we had essentially a 20
percent headcount reduction inpractice over that same 10 year
period.
So that really should helpexplain our problems.
Speaker 3 (32:11):
Plus, they've been given a lot more responsibility
due to various pieces oflegislation, not just Secure 2.0
, the mental health paritylegislation at the end of the
last Trump administrationlegislation at the end of the
last Trump administration.
Speaker 1 (32:27):
Yeah Well, we could have a whole separate discussion
about the mental health andsubstance abuse issues and how
the department has been applyingthose in-.
Speaker 3 (32:31):
I mean, yeah, that's a different discussion, but it's
still it's a very difficult wayto do those investigations.
That makes it harder ratherthan-, but it's still a
bandwidth issue.
Speaker 1 (32:40):
It is.
So anyway, you asked what doesthis mean for Secure 2.0?
Let me get back on topic.
Much though I like to ramble,as we can tell, I do worry about
the bandwidth here.
I think IRS Treasury has beenputting out guidance and we've
been getting some answers, but Ithink in general I'll just say
I think the regulated communitywish we'd had the answers
(33:01):
they've given us so far about ayear ago, and so there's a
timing issue that's raised someconcerns there.
Labor's had some similar issues.
It has fewer demands placed onit under Secure 2.0 in terms of
responding to some of theday-to-day issues.
But you know they had a lot oftrials and tribulations with
their new missing participantdatabase and problems getting
(33:24):
coordination between governmentto get access to some of the
data and issues like that.
So I think Secure 2.0, despitethe fact that in my view it
should have been one of the toppriorities of the last
administration's sort of pensionareas I think frankly DOL spent
an awful lot of time onfiduciary.
It could have spent on Secure2.0 implementation.
(33:46):
That would have been much morevaluable.
So, yeah, I do worry about-.
Speaker 3 (33:50):
Certainly, in retrospect, it would have been a
much more efficient use of time, that's for sure.
Speaker 1 (33:57):
Well, it's not as though they didn't see the
lawsuits coming on that issue,but I guess my point would be I
am concerned about the bandwidth, but I also agree that the
solution to all these problemsisn't to just throw more funding
at the government.
The question I think we'regoing to have for the Trump
administration, say two yearsfrom now, is were you good at
(34:18):
breaking things to repair themand remold them into a new,
better functioning thing, orwere you just good at breaking
things to repair them and remoldthem into a new, better
functioning thing?
Or were you just good atbreaking things?
And that's going to be thequestion they're going to have
to answer, you know, a couple ofyears down the road.
I'll throw out another terribleanalogy or metaphor.
Speaker 3 (34:36):
No, that was solid.
Speaker 1 (34:37):
You like that one, All right.
Well, let me mess it up bythrowing out another one.
Surgery comes with swelling andbleeding and all the difficult
things.
But you know, four months lateryou're better than you were
before.
Are we in the swelling, cutting, bleeding phase, or you really
should have stopped.
You stop with the other one.
Speaker 3 (34:56):
Thank you, brad, listen, we appreciate your time.
I don't know if that's yourmusic or my music.
Speaker 1 (35:04):
My apologies.
Yes, I have still been tryingto figure out how to turn this
jabber thing off.
Oh, I think.
Speaker 3 (35:10):
Joey's good at editing stuff, so don't worry
about it.
Anyway, thank you so much foryour time.
There's obviously a ton ofstuff going on.
Really appreciate your insightand kind of at least a window
into what to expect over thenext four years.
It's not going to be boring.
Speaker 1 (35:28):
It definitely is not, and I just want to stop with an
unsolicited plug for the workthat you guys do at the ARA and,
brian, what you've done, youknow you've been one of these
guys who's been working behindthe scenes here for 20, 30 years
on these issues and I don'tthink everybody else in the real
world I know DC pension geeksdo but I don't know that
everyone else appreciates howbig an impact you've actually
(35:50):
had on making things better overtime.
So I do just want to throw thatunsolicited praise out there.
Speaker 3 (35:54):
Very kind, Brad.
You've made a difference too.
Thank you, We'll keep on going.
There's still a lot of work todo right that there is.
Speaker 1 (36:04):
Thanks, brett, thank you.
My point is, though, what the late what Employee
Benefits Security Administrationmight say about investments in
private equity.
I think we're likely to see amore positive stance, but how
big an issue that is, I think,will depend in part on who's
sitting in the seat as the EPSAassistant secretary and how much
they personally want to work on.
Speaker 2 (00:21):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:41):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:47):
All right, everybody, it's 2025, and I'm a little bit
behind the eight ball here, soit's time to catch up with some
new DC Pension Geeks, podcasts,and there's a little bit going
on here inC, and we've got agreat guest to help us try to
figure out what's going on,what's going to happen with the
(01:09):
new Trump administration Noneother than the Honorable Brad
Campbell, the former assistantsecretary for the Employee
Benefit Security Administration,the administration and Brad has
got an incredible resume timeworking for the Department of
Labor.
He was also on Capitol Hill asa legislative director has both
(01:42):
a background in labor issues,but also did his fair share of
tax issues as well.
We're very fortunate to havehim with us today, so thank you,
brad, for joining me today.
Speaker 1 (01:52):
Hey, thank you for the invitation.
I mean when the man, the myth,the legend, brian, gives me a
call.
I got to show up.
Speaker 3 (01:59):
Well, you know, I think my kids would refer to me
mostly as myth, but anyway, Ithink my kids would refer to me
mostly as myth, but anyway.
So we like, as everyone knows,we like to talk a little bit
about you.
Know how you became a pensiongeek, so how did you end up in
this wonderful world we callERISA?
Speaker 1 (02:17):
Well, I think you're right.
No one out there grows upwanting to be a pension geek, an
ERISA lawyer, a tax lawyer, anyof those kinds of things.
It's one of those things youjust somehow find your way into.
In my case, as you say, I wasworking on Capitol Hill and I'd
been doing tax issues, so I wassomewhat adjacent to the
employee benefit space for thenCongressman Chris Cox, later the
(02:38):
SEC chair, and I got a job, asyou said, being legislative
director for a freshmancongressman who had come in,
ernie Fletcher.
Dr Ernie Fletcher, who was,though, a freshman, he was a
medical doctor, and at thatpoint in Congress in the late
90s, we were involved in thepatients' Bill of Rights fights.
So it was all about health carereform, particularly the ERISA
(03:01):
aspects of health care,particularly the ERISA aspects
of health care, and so I reallygot into ERISA in the first
place through the health caredoor by working with him on that
legislation and, effectively,about the time the health care
debate was sewn up andultimately no bill happened,
which wasn't a bad outcome forthat particular bill.
Around that time the Bushadministration had just started
(03:24):
and Enron happened, and so Ikind of went over to the
Department of Labor with theBush administration and because
of Enron and really pushingthings, even though I went over
there originally for more of ahealth benefits focus.
I ended up liking and reallyfocusing more on retirement
plans.
So since roughly 2001, I'vebeen focused more on the
(03:46):
retirement plan side of things.
Speaker 3 (03:48):
It's like a bug you get bit and people just don't
want to stop doing it.
That's a very common story.
There's something about thisretirement policy.
I think you feel like you canactually make a difference and
do some good, and that'sprobably what drives a lot of
people behind it.
Speaker 1 (04:06):
Well, I have to say that is something that I, you
know, I've had a verynon-traditional legal career.
I went to a law firm after Ileft the government.
I was never an associate ornever went through that
traditional law firm careerroute, and I don't regret that
at all.
I really enjoyed my timeworking in public policy.
The final job I had in thegovernment the Assistant
Secretary of Labor for EmployeeBenefits was the best job I've
(04:29):
ever had.
I really, as you said, I feltlike we were doing something
that really mattered.
We were trying to solveproblems that help people retire
and you know, I feel like somereally good things.
I'm not saying just for me, butfrom our time there and what
had happened with the PensionProtection Act and implementing
the regulations for QDIAs, Ijust feel like we got to be
(04:49):
there at a time.
I got to be there at a timewhen important things happened
and I really enjoyed being apart of it.
Speaker 3 (04:55):
Yeah, there was a lot going on during that period of
time and I think you know it was.
That was sort of a period oftime, both of us having been
doing this for unfortunately waytoo long.
Um, what that I describe as the, as the, as the period of, of
generally general harmony, andwhat I mean by that is people
(05:17):
generally saw what we were doingwas, you know, good work,
wasn't overly controversial.
Uh, no, you, Nothing was reallymaking waves.
It was more like, hey, we'remaking some changes to make the
system better and, frankly,since the end of that
administration, starting withsome of the work in the Obama
(05:42):
administration, obviously withthe first iteration of the
fiduciary rule, we've certainlygot stuff that's a lot more
controversial.
I guess to some degree weshould be.
I don't know, happy is not theright word, but at least we're
getting paid attention to nowmore than we were doing back
(06:04):
then.
It was hard to get anybody'sattention about retirement,
certainly way back in the 90swhen I first started, but
obviously we got to start withthat first question, right, you
know what's going to happen withthe fiduciary rule again.
Speaker 1 (06:23):
Well, we are waiting to see, and I wish I had a
better answer than that, butthat is.
That is the situation.
So, as you said, we had thevery first version which the
Obama administration proposedback in 2010, 2011.
And at that time, there wasuniversal agreement.
Republicans and Democrats,everybody hated the initial
proposal.
That's true.
Really wasn't any question.
Speaker 2 (06:44):
Capitol.
Speaker 1 (06:45):
Hill hated it, you know, and it was kind of a
Department of Labor onlyinitiative at that time.
So they went back and retooledit and a couple of years later,
due to changes in variouspersonnel throughout the Obama
administration, it went frombeing this DOL idea nobody liked
to suddenly being a reallyimportant idea at the White
House, and so they promoted itand in 2015, they came back with
(07:08):
a fiduciary rule that actuallymade it to the finish line and
became a final regulation andreally radically, in my view,
tried to change the scope of thedepartment's jurisdiction to
not just be over ERISA plans youknow the plan sponsor agenda
but also over the retail side ofindividual retirement accounts.
And I think that's really wherethe controversy centers on is
(07:33):
not the issue of should I be afiduciary when I tell a plan how
to invest?
Yeah, I think there's prettymuch universal agreement among
at least all the majorpolicymakers, not saying the
entire world but yeah, yes,fiduciary advice should include
people telling plans how tostructure their 401ks, et cetera
.
The question is should thatextend to participants who are
(07:53):
rolling over to IRAs?
Should that extend to theinternal management of IRAs?
Should that extend to adistribution from an IRA to buy
an annuity or something of thatnature.
And that's where there's becomea split, where the Obama folks
first went down that path ofexpanding it.
That was, of course, litigated.
We went to the Fifth Circuit.
The Fifth Circuit said no tothe rule.
(08:14):
In between, the first Trumpadministration came into office
and they kind of delayed therule, but they let it partially
go into effect and then thecourt decision came and the
fiduciary rule was dead.
That was round two.
What I think people forget whenthey say what's going to happen
next?
Surely the Biden rule, which wehaven't gotten to yet.
Speaker 3 (08:36):
Deja vu.
Well, we're deja vu all overagain, right?
Speaker 1 (08:40):
Yeah, we're in the same position.
The Biden administration cameout with a rule and the Trump
administration's in a positionto decide what happens to it in
the courts or in the agency, andI think it's instructive to
remember that the first timethis happened, in the first
Trump administration, the courtcase was won by the opponents of
the fiduciary rule.
The Fifth Circuit vacated theObama-era rule, and so the issue
(09:03):
was effectively dead.
It was actually and I thinkpeople tend to forget this it
was actually the Trumpadministration who resurrected
in a different form, 2020 or two.
Yeah, key parts of the Biden ofthe Obama era rule as an
interpretive guidance in thefront of a prohibited
transaction exemption and it wasa really weird process because
(09:25):
the preamble to an exemptioncontained a bunch of new policy
that was unrelated to the textof the exemption but told you
how to interpret an original1975 regulation that was not
directly part of the exemption.
It was a weird affirmative actby the Trump administration in
policy.
Speaker 3 (09:44):
Well, but they needed to say something.
I mean because there werequestions that had to be
answered, and I think they didit in a way that, for the most
part, most of the people in theindustry thought it worked okay.
Speaker 1 (09:56):
Well, I think there's some room for debate on that.
Let's remember that parts ofthat guidance were immediately
challenged in a district courtin Florida and in a district
court in Texas.
Speaker 3 (10:06):
Not the new 2020-02, the old 2020-02.
Speaker 1 (10:11):
Right, the old 2020-02, which is where the
Trump administration sort ofresurrected rollover as
fiduciary advice of their ownmotion.
Speaker 3 (10:19):
The Deseret, repealing the Deseret rule.
Speaker 1 (10:21):
Yeah, they repealed the Deseret advisory opinion and
then they replaced it with thisnew guidance, my favorite part
of which was later struck downby this Florida district court.
But my favorite part of whichwas where they said if you and a
advisor meet, you an individualand an advisor meet and you've
only met once, but you intend tomeet again in the future to
(10:43):
have more advice provided afterthe rollover.
And it meets the regular basistest.
I was paying my membership.
It's your New Year's resolution.
Speaker 3 (11:09):
My New Year's resolution is to continue giving
advice.
All right.
So if you had to predict,because presumably the Fifth
Circuit is going to vacate thisrule and certainly there will be
no reason not to, because thenew administration is not going
to defend the rule Um are we?
(11:29):
Where are we going?
Speaker 1 (11:31):
Well, so that that, again, is why I think, looking
at the last Trump term, last thefirst Trump term, the first
Trump administration, isinstructive, because even though
that issue was dead, theyresurrected parts of it, which
indicates at least at that timethey had a policy preference for
some aspects of expanding notthe full scope of expanding
fiduciary status to rolloveradvice, et cetera.
(11:54):
And so then the Bidenadministration put out a much
more detailed and comprehensiverule, and that's what's being
litigated now is the challengeagainst the Biden
administration's broader rule,and again it's fallen.
Litigated now is the challengeagainst the Biden
administration's broader rule,and again it's fallen to the
Trump administration to decidewhether to defend it in court or
to replace it or some othermeans.
And I think the short answer isI think they probably will be
(12:17):
taking the position in the nearterm that they don't have to
decide, to decide right, becauseright now, where it sits, the
Fifth Circuit is hearing anappeal on the narrow issue of
whether the stay of theeffective date of the 2024
Biden-era rule, in other words,should the rule, ever go into
effect.
That is what the Fifth Circuitis deciding.
(12:38):
If they decide that the stayswere valid, then we go back to
the lower court to actuallystart litigation over whether
the rule is valid.
So unless the Fifth Circuitdecides to lift the stay which I
tend to agree with you, I thinkis unlikely Unless they decide
to do that, then we're going tohave ongoing litigation and no
immediate Probably at least twoyears, maybe even more.
(13:03):
Yeah, and so I think the bettingis that the Fifth Circuit will
rule, maybe by summer-ish.
Speaker 3 (13:10):
Just on the TRO issue .
Speaker 1 (13:11):
Just on the stay issue.
Right, yeah on that.
And so even if the FifthCircuit decides, nope, we're not
going to uphold the stay, we'lllet the rule go into effect.
That would be a precipitatingevent where the Trump
administration will have to thentake an action to either change
what the substance of the ruleis or extend the effective date
(13:31):
while they decide to change thesubstance.
Speaker 3 (13:35):
And the impact of the stay was to go back to the
prior 2020-02.
Speaker 1 (13:42):
That's true as modified by the loss in Florida
of that anticipated ongoingrelationship.
Speaker 3 (13:48):
the court basically said you can't count advice in
Ireland, at least in that areaof the country, I guess,
arguably, who knows Well?
Speaker 1 (13:59):
actually no, because in that case DOL did not
challenge the ruling, theydidn't appeal the ruling of the
district court in Florida.
So that actually stands.
I think that part of theguidance.
Speaker 3 (14:12):
I guess there's a question of how, if they wanted
to, one could see them comingback and saying old 2020-02 as
modified as you're suggesting,because you know that's going to
be there.
They're going to be tendingtowards that direction anyway.
Speaker 1 (14:28):
I think that's that all of this was a really long
build up to.
What will they actually do?
I mean, the first is they haveto decide their.
They, the Trump administration,have to decide their posture,
and how vigorously are theygoing to defend a Biden rule
that they probably don't agreewith in all, the details that
they're not going to do.
But they might have sympathyfor some of its aims.
(14:49):
So if you know the course ofthe-.
Speaker 3 (14:53):
Yeah, I think what I've been telling people is as
long as you're still, stick with2020-02,.
Speaker 1 (15:00):
You know, as you were dealing with that before
2020-02, as you were dealingwith before, no-transcript,
unless the Trump folks do decideto, let's say, use the court
process to withdraw the rule andthen replace it with something
(15:23):
else.
But no, you can't predict that,really.
No, are you kidding me?
I mean, I think it's anunlikely outcome, but it is
possible.
Speaker 3 (15:35):
No, I'll take that bet.
Speaker 1 (15:37):
Your bet is nothing happens until after this term of
the Trump administration.
Speaker 3 (15:42):
Until there's another administration.
I don't think thisadministration is going to other
than saying we don't supportthe Biden rule and going back to
the way we had it before withthe modification that we talked
about.
No, there's no way they want totouch this with a 10 foot pole.
Speaker 1 (16:04):
Hey, I would take that outcome, I hope.
Speaker 3 (16:06):
I'm I feel very confident about that.
I mean, you know, republicansare objecting to the ESG rule,
which actually isn't that bad.
I mean so the idea that theywould take on this issue.
Considering how polarizing itis, I would strike me as
incredibly odd for them to wantto take this on.
Speaker 1 (16:28):
Well, you mentioned before how there was this kind
of period of harmony inretirement policy in the past.
I actually think it's stillrelatively true.
I think compared to many otherareas, retirement policy is a
lot less that's fair, that isfair.
But to your point-.
Speaker 3 (16:44):
Certainly on the legislative side, is much more
so than it is on other issues.
Speaker 1 (16:49):
Yeah, but certainly to your point, there are a
couple of what have become hotbutton issues, and when you
reference ESG, I think that isgoing to be the hot button issue
in the ERISA space, where weprobably are looking at
regulatory changes.
We probably are looking at moredetailed executive orders than
we've seen thus far, and I haveto agree with you, and this is
(17:13):
this is why I would like to sayI think I've been pretty even
handed in my criticism of theObama, biden and Trump
administrations, of the lastthree administrations.
I actually think the Bidenadministration did a pretty good
job on getting a fairly neutralinvestment decision-making rule
that we call the ESG rule,although it's actually a lot
(17:33):
broader than that and we agreewith you on that.
Speaker 3 (17:35):
I mean, as we publicly have said, that the
rule, notwithstanding all thecontroversy, if you actually
read the rule, which apparentlynobody does, it is very balanced
.
Speaker 1 (17:49):
Yeah, it basically says fiduciaries can consider
these factors where they areessentially relevant to the
economic analysis, but in noevent can they sacrifice returns
or increase risks to achievecollateral objectives.
Speaker 3 (18:01):
You could say that pretty much about anything.
Speaker 1 (18:04):
That's a pretty straightforward analysis that
allows you to take into account,say you know, the economic
realities of a heavy pollutionindustry which faces litigation
risks and regulatory risks.
Nobody would dispute that youshould take that into account.
But it also allows you to say,yeah, we're not going to invest
(18:26):
in the fund that only invests ingreen energy and doesn't care
how much money it loses.
That's not a starter for anERISA plan, and I think the rule
as we have it actually does theright balance there.
That said, I think thatregulation is very much going to
be front and center, and Ithink the recent American
Airlines decision is just goingto pour some fuel on the fire
for this debate.
Speaker 3 (18:46):
So let's.
So I'm glad you brought that up.
Not so much about ESG, which Iagree with you that you know
they're going to have to decidehow they want to deal with the
litigation in the Fifth Circuit.
Deal with the litigation in theFifth Circuit which, unlike the
fiduciary rule, the FifthCircuit seems to be leaning
(19:08):
towards actually upholding therule.
But we'll see Litigation ingeneral.
There is obviously continuingconcerns from a policy
standpoint about theproliferation of lawsuits
against ERISA plans now bleedinginto the health space.
(19:30):
In our capacity, now that PSEAis part of ARA, when we do focus
groups with large and megaplant sponsors, they repeatedly
say to us their number one jobis not to get sued.
They won't consider anythinginnovative because their number
(19:55):
one job is to make sure thattheir plan, their employer,
doesn't get sued.
And it's just, frankly, it'ssad and even more so it's having
a chilling effect on anyinnovation because there's such
a reticence on the part of theseplant sponsors to do anything
(20:16):
innovative out of fear of alawsuit Is there, you think?
Speaker 1 (20:28):
is there some climate in the new administration to
try to do something about it?
I think there is, but I thinkultimately it's going to depend
on which officials sit in whichseats, and many of those we just
don't know yet.
And so I agree with you, Ithink this area is one the wave
of class action litigation and,let's just be upfront, there's a
very evil synergy between theclass action and the contingent
(20:49):
fee.
Right, if I can come on behalfof a participant and make an
argument that a multi-billiondollar pension plan had a
fractional percentage of anerror, that adds up to a big
pile of money that I can now,you know, for the cost of
writing up a complaint and doinga little research and then
starting to do some discovery.
Speaker 3 (21:08):
And, from what I understand, a lot of these cases
are.
A lot of these cases are fundedwith angel investors or, you
know, venture capitalists, andand they're they, they they see
it as a you know, as aninvestment opportunity.
It has nothing to do with thesubstance of the case, it's just
business.
They're filing enough of thesecases that they're going to get
a return based on 30%, 33%awards.
Speaker 1 (21:33):
That makes it very lucrative from a business
standpoint this standpoint andunfortunately for the plan
sponsor, the ABC company thathas the billion dollar plan.
Even if they're 100% in theright and have no questions
about how well they did theirjobs as fiduciaries or their
fiduciary committee did its job,they have to do the green eye
(21:53):
shade accounting as well and say, okay, well, we could spend 15,
$20 million defending ourselvesand proving that we were right,
or we could pay $8 million andmake these guys go away and the
lawyer gets 3 million.
The participants get usually notmuch in terms of practical
advantage and sort of thatsystem rolls on, as you said, as
(22:16):
a business, which I think isunfortunate.
That's not what the classaction should be doing, and so
I'm with you.
I think we do need and I thinkthere could be some very
effective things that the Trumpadministration could do, if you
look at some of the commontrends in ERISA litigation the
last five or 10 years good clearregulatory action or good clear
(22:40):
guidance, not just through theamicus brief program where the
government comes in and statesits views in a particular case,
but some broad-based guidancecould clear up ambiguities that
are being exploited in some ofthese cases, for example, the
recent wave in forfeiturelitigation.
That's a place where one I thinkactually Treasury, irs and
(23:02):
labor have all said fairlyclearly that this is not an
impermissible use of forfeituresto offset employer
contributions and I think ifthere was some additional
clarity on that it would reallyshut down the viability of some
of those cases and I thinkthere's several One would think,
although sometimes courtschoose to ignore that clear
(23:22):
guidance regardless.
That is true, but it would behelpful, I think, if the-.
It would certainly be helpful Ifsome of those issues were sort
of tackled head on with an eyetowards how do we close down
some of the common areas oflitigation where really it is
abusive and not about protectingparticipants.
I think there could be somevaluable ground gained there.
Speaker 3 (23:45):
What do you see as other priorities?
What about alternativeinvestments?
Speaker 1 (23:51):
Yeah, well, I think we have some pretty clear
indications that the Trumpadministration is in a very
different place on things likecryptocurrencies than the prior
administration was.
You've got the SEC taking somevery direct action.
You've got now a crypto czar Ithink the term was at the White
House and ultimately that willalso reflect back on DOL.
(24:12):
You know, as I'm sure many ofour listeners here recall the
Department of Labor what fouryears ago now put out, three
years ago put out what theycalled guidance, but I like to
think of as a glorified pressrelease that basically, to use a
sports analogy- it was abrushback.
Speaker 3 (24:30):
I think they called it a compliance assistance
bulletin.
Speaker 1 (24:33):
Yes, that's what it was.
It was the new thing theycreated recently the CAR, the
Compliance Assistance ReportBulletin.
Is it a cab and not a car?
Anyway, there've only been twoof them.
So you know, maybe I justhaven't internalized the acronym
yet, but in that they reallytook some very vague language
(24:55):
and said we're concerned aboutyou.
Know, fiduciaries are allowedto invest in all sorts of things
, or very few restrictions onwhat's a permissible investment.
But here are, you know, eightreasons why we don't like crypto
, and we're suggesting to youthat if you do this crypto stuff
, we will likely investigate you.
And that, by the way, isn'tjust for cryptocurrencies,
(25:20):
that's for cryptocurrency andcrypto related investments.
As though there's no differencebetween an index fund of a
basket of crypto related issuesas opposed to buying one
security or whatever it is youcall a cryptocurrency.
Maybe it's not a security.
I'll leave that to thesecurities lawyers to fight that
out.
Speaker 3 (25:39):
I'm pretty sure it included the Trump meme coin.
That much I know.
Speaker 1 (25:43):
Yes, and that would certainly be true.
And the other thing is they, inthat same guidance, again
brought up this issue, which hasbeen plaguing us with Labor
Department guidance for a while,where they tried to imply that
there's a fiduciary obligationto prudently select and monitor
everything that's availablethrough the brokerage window,
(26:03):
not just the window itself.
Even though their regulationsclearly state a brokerage window
, what's available through thewindow is not a designated
investment alternative subjectto those rules.
So again they suggested well,if your brokerage window allows
some investment incryptocurrency, that might be
imprudent and will investigateyou.
I think they had to take somesteps back on that.
I think, actually, if I recallit was in an interview with you
(26:26):
that Tim Houser, the head,career, clarified.
Clarified, some might say,walked back some of those
statements.
But my point is this was a longrambling diversion.
My point is that I think we sawa very anti-crypto and similar
private equity stance by theBiden administration.
(26:47):
In the prior Trumpadministration we saw some
proactive steps.
There was some guidance theyput out on private equity
investments.
That was limited but still sortof provided some narrow avenues
.
Speaker 3 (26:59):
Open the window a little bit.
Speaker 1 (27:01):
Yeah, I wouldn't call it wholehearted embrace, by any
means it had a lot oflimitations on it, but it was
sort of a.
Speaker 3 (27:09):
Would you expect this , you know, trump 2.0 to be a
little bit more?
You know?
Speaker 1 (27:17):
more welcoming.
Let's put it that way I do theimpression that I get and
ultimately again we'll just goback to this mantra that we
don't yet know who's going to bein which seats.
So that will affect a lot ofthis level of guidance, where
it's not coming out of the WhiteHouse but it's coming out of
one of the Department of Labor'ssub-departments, this one might
actually be pushed out of theWhite House.
(27:37):
Well, this one might have itsown executive order governing,
right, own executive ordergoverning.
But my point is, though, whatthe late, what Employee Benefits
Security Administration, mightsay about investments in private
equity?
I think we're likely to see amore positive stance, but how
big an issue that is, I think,will depend in part on who's
(28:00):
sitting in the seat as the EPSAassistant secretary and how much
they personally want to work onit.
Got it?
But I think it's definitely saidyou know the new leadership and
looking at the SEC, for example.
I think it's definitely saidwe've been doing some things
here that we want to review,treat differently Plus the.
Sec just recently lost in courton its refusal to engage with
(28:21):
some crypto.
Speaker 3 (28:23):
And also, you know I think it'll, at least when it
comes to crypto.
I continue to be of the viewit's going to be hard to
consider the ERISA planimplications until the
regulatory framework at thefederal level has been set up,
and you know that still hasn'thappened yet.
Speaker 1 (28:43):
I would certainly agree with that.
So I would say, regardless ofwhat you think or don't think
about crypto in terms of itbeing gambling versus investing,
you're right.
I think what the SEC is puttingin motion is a way to approach
it as sort of a legitimate areawhich we're going to regulate,
as a legitimate area which isdifferent in terms of how the
(29:04):
government has approached it thelast four years.
Speaker 3 (29:09):
Last question Secure 2.0, we're still implementing,
and I think this is sort ofrelated.
I'm going to kind of weave twothoughts together here.
Obviously, the Department ofGovernment Efficiency,
Republicans in the House, arevery interested in trying to
(29:29):
reduce the size of government.
You know, you're aware, notonly from a budgetary standpoint
, but you know there areproposals to incentivize current
workers to leave that are outthere.
Are you concerned about thebandwidth at the agency to be
(29:50):
able to deal with either theissues we've talked about or
with Secure 2.0 implementation?
Speaker 1 (29:56):
Yes, frankly I am.
I mean I'm not saying thattranslates into we should
definitely have, you know,bigger agencies and more
government.
I'm not saying that translatesinto we should definitely have
bigger agencies and moregovernment.
I'm not saying that.
But I think we have seen at IRSand DOL that they have been
much slower to process like onthe IRS side, determination
letters, all those normal thingswe do to interact with the IRS,
(30:19):
epcurs, and all of that istaking longer and is causing
some consternation that therejust isn't the bandwidth over
there to do the things thatroutinely need to get done At
labor.
I've seen it manifested more inthe investigation side of
things.
I got interested in this afterthe you know, the help not the
(30:40):
help committee, the houseeducation, the workforce
committee started looking atsome of DOL's investigations and
so, just of my own interest, Iwent back and looked 10 years
ago versus now.
How many civil investigationsand criminal investigations was
the agency closing?
You know how is that workingand generally what the numbers
show.
And just to not have one yearbe an anomaly, I looked at four
(31:02):
years from 2010 to 2013,compared to four years 2020 to
2023, which is the most recentyear for which the data is
available 23.
And it showed a 78% reductionin civil cases closed.
It was about a 36% reduction incriminal cases closed.
(31:27):
There's been the question thatthen raises is well, does that
mean they're just doing fewercases?
And that's not been myexperience.
My experience as a practitioneris they're doing the same
amount of cases, they just takelonger.
The only data we've really seento back that up is from a GAO
report where they looked at theclass of 2017 cases that EBSA
opened and four years later, oneout of six was still open.
(31:47):
So that tends to suggest it's agrowing backlog.
But we can't see that from thepublicly available data, so I
just hold that out as an exampleof where I do think there are
bandwidth agencies.
If you look at DOL, they willsay we had essentially a 20
percent headcount reduction inpractice over that same 10 year
period.
So that really should helpexplain our problems.
Speaker 3 (32:11):
Plus, they've been given a lot more responsibility
due to various pieces oflegislation, not just Secure 2.0
, the mental health paritylegislation at the end of the
last Trump administrationlegislation at the end of the
last Trump administration.
Speaker 1 (32:27):
Yeah Well, we could have a whole separate discussion
about the mental health andsubstance abuse issues and how
the department has been applyingthose in-.
Speaker 3 (32:31):
I mean, yeah, that's a different discussion, but it's
still it's a very difficult wayto do those investigations.
That makes it harder ratherthan-, but it's still a
bandwidth issue.
Speaker 1 (32:40):
It is.
So anyway, you asked what doesthis mean for Secure 2.0?
Let me get back on topic.
Much though I like to ramble,as we can tell, I do worry about
the bandwidth here.
I think IRS Treasury has beenputting out guidance and we've
been getting some answers, but Ithink in general I'll just say
I think the regulated communitywish we'd had the answers
(33:01):
they've given us so far about ayear ago, and so there's a
timing issue that's raised someconcerns there.
Labor's had some similar issues.
It has fewer demands placed onit under Secure 2.0 in terms of
responding to some of theday-to-day issues.
But you know they had a lot oftrials and tribulations with
their new missing participantdatabase and problems getting
(33:24):
coordination between governmentto get access to some of the
data and issues like that.
So I think Secure 2.0, despitethe fact that in my view it
should have been one of the toppriorities of the last
administration's sort of pensionareas I think frankly DOL spent
an awful lot of time onfiduciary.
It could have spent on Secure2.0 implementation.
(33:46):
That would have been much morevaluable.
So, yeah, I do worry about-.
Speaker 3 (33:50):
Certainly, in retrospect, it would have been a
much more efficient use of time, that's for sure.
Speaker 1 (33:57):
Well, it's not as though they didn't see the
lawsuits coming on that issue,but I guess my point would be I
am concerned about the bandwidth, but I also agree that the
solution to all these problemsisn't to just throw more funding
at the government.
The question I think we'regoing to have for the Trump
administration, say two yearsfrom now, is were you good at
(34:18):
breaking things to repair themand remold them into a new,
better functioning thing, orwere you just good at breaking
things to repair them and remoldthem into a new, better
functioning thing?
Or were you just good atbreaking things?
And that's going to be thequestion they're going to have
to answer, you know, a couple ofyears down the road.
I'll throw out another terribleanalogy or metaphor.
Speaker 3 (34:36):
No, that was solid.
Speaker 1 (34:37):
You like that one, All right.
Well, let me mess it up bythrowing out another one.
Surgery comes with swelling andbleeding and all the difficult
things.
But you know, four months lateryou're better than you were
before.
Are we in the swelling, cutting, bleeding phase, or you really
should have stopped.
You stop with the other one.
Speaker 3 (34:56):
Thank you, brad, listen, we appreciate your time.
I don't know if that's yourmusic or my music.
Speaker 1 (35:04):
My apologies.
Yes, I have still been tryingto figure out how to turn this
jabber thing off.
Oh, I think.
Speaker 3 (35:10):
Joey's good at editing stuff, so don't worry
about it.
Anyway, thank you so much foryour time.
There's obviously a ton ofstuff going on.
Really appreciate your insightand kind of at least a window
into what to expect over thenext four years.
It's not going to be boring.
Speaker 1 (35:28):
It definitely is not, and I just want to stop with an
unsolicited plug for the workthat you guys do at the ARA and,
brian, what you've done, youknow you've been one of these
guys who's been working behindthe scenes here for 20, 30 years
on these issues and I don'tthink everybody else in the real
world I know DC pension geeksdo but I don't know that
everyone else appreciates howbig an impact you've actually
(35:50):
had on making things better overtime.
So I do just want to throw thatunsolicited praise out there.
Speaker 3 (35:54):
Very kind, Brad.
You've made a difference too.
Thank you, We'll keep on going.
There's still a lot of work todo right that there is.
Speaker 1 (36:04):
Thanks, brett, thank you.
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