With Congress Stalled, Obama Seeks Governors’ Help to Aid Middle Class - nytimes

WASHINGTON — President Obama on Monday beseeched the nation’s governors to partner with him on elements of his agenda to help the middle class in the face of congressional gridlock, saying there was room for collaboration on economic issues, health care and criminal justice reform.

“I’m in the fourth quarter of my presidency — or, as some of you might call it, the kickoff for your campaign season — but I think there’s still a lot that we can get done together,” Mr. Obama told the governors on Monday at the White House, where they were wrapping up their winter meeting.

He said it was time to “move past some of the habits of manufactured crisis and self-inflicted wounds” that he said had been created by Congress, including the looming threat of a shutdown of the Department of Homeland Security because of a dispute over Mr. Obama’s recent immigration directives.

“It will have a direct impact on your economy, and it will have a direct impact on America’s national security,” Mr. Obama said of a lapse in funding for the department, in which the staff would be furloughed or forced to work without pay. “Their hard work helps to keep us safe, and as governors, you know that we can’t afford to play politics with our national security.”

The president also thanked the governors from both parties who have expanded their Medicaid programs under the Affordable Care Act, and made a pitch to those who have not changed their stances.

“I’d urge you to consider it, because our team is prepared to work with you to make it happen,” Mr. Obama said.

Also on Monday, Mr. Obama will move to tighten regulations on investment professionals who handle retirement savings accounts, calling for new rules to protect investors from receiving conflict-ridden advice from brokers looking out for their own bottom lines.

Mr. Obama’s push, part of a yearslong effort by his administration to strengthen the rules governing financial advice, is likely to draw opposition from congressional Republicans and well-funded industry players who have argued that such regulations would raise costs for investors.

The Council of Economic Advisers estimates that more than 40 million families have money in retirement savings accounts that are worth more than $7 trillion, said Jason Furman, the council’s chairman, adding that the conflict-ridden advice can lower annual returns by an average of one percentage point, accounting for losses of as much as $17 billion each year.

“When you have a broker who has their compensation directly tied to the advice that they’re giving to a person, often with that person not even knowing that that’s the case, they’re going to systematically very often have an incentive to steer clients toward a product that’s not necessarily in the best interests” of the consumer, Mr. Furman said. “As a result, American families will pay billions of dollars of extra costs for their retirement.”

Under new rules to be proposed by the Labor Department, which oversees such plans, retirement advisers would have to put their customers’ interests ahead of their own, an obligation known as a “fiduciary duty.” While many investment advisers are already subject to this requirement, those who handle retirement accounts have a looser one that mandates that they recommend “suitable” investments based on clients’ personal circumstances, including age and appetite for risk.

Among the practices the Obama administration says it is seeking to curb are brokers’ steering investors into funds with higher fees and lower returns and persuading them to roll over their retirement savings from lower-cost plans to higher-cost accounts. Most investors are not aware of the “hidden fees” and “backdoor payments” that incentivize such practices, said Jeffrey D. Zients, the director of Mr. Obama’s National Economic Council.  Read More at NYT

Obama Seeks Governors’ Help to Aid Middle Class

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