Voya Perspectives | Market Series | November 24, 2014
Market Insight
What Should We Expect from
the 114th Congress?
Sean Cassidy
Vice President of
Federal Government
Affairs, Voya Financial
Although we still don’t know the outcome of every House
and Senate election, we do know that the Republicans
have increased their majority in the House by a minimum
of 12 seats and that they will assume control of the Senate
next year after gaining at least eight seats. Given that they
lack the majority in either chamber necessary to override
a presidential veto, however, has anything really changed?
Did this election matter?
We think it did; below we provide our expectations around
a number of key issues in 2015. It’s worth noting that there
is only a brief period during which Congress is likely to
pass any meaningful legislation — tax-related or otherwise
— before the 2016 presidential race further polarizes the
House and Senate and reduces the odds of bipartisan
cooperation dramatically.
Comprehensive tax reform. Given the many industries
and individuals invested in the current tax code,
comprehensive tax reform is difficult under any scenario.
However, the incoming chairman of the House Ways and
Means Committee — Rep. Paul Ryan (R-WI) — and the
incoming chairman of the Senate Finance Committee
— Sen. Orrin Hatch (R-UT) — both have indicated a
commitment to attempting tax reform and fully intend to at
least start the process next year. It’s not yet clear whether
they will hold many of the same fact-gathering hearings
that have been convened over the last several years or if
they will instead move straight to legislation. Regardless,
it’s almost certain that a variety of retirement-related
tax preferences will be considered as potential revenueraising options.
Repeal or substantial modification of the Dodd-Frank
Act. Lacking the ability to override a presidential veto
despite their majority in both chambers, Republicans
are unlikely to pass legislation repealing or substantially
weakening the Dodd-Frank Act. However, the House
passed a number of bipartisan bills in the 113 th Congress
that would have amended the statute, and these are likely
to be repassed and considered by a Republican-controlled
Senate next year. For example, the House passed bills
to provide regulatory exemptions for the end users of
derivatives, to exempt inter-affiliate swap transactions
from some regulatory requirements and to increase small
business access to the capital markets.
Increased Congressional Oversight of the Fed, FSOC,
CFPB, and other agencies. The House Financial Services
Committee and Senate Banking Committee will almost
certainly conduct a variety of oversight hearings focusing
on financial industry regulators such as the Federal
Reserve, the Financial Stability Oversight Council (FSOC),
the Securities and Exchange Commission (SEC) and the
Consumer Financial Protection Board (CFPB). Incoming
Senate Banking Committee Chairman Richard Shelby
(R-AL), for example, has been a vocal critic of the FSOC’s
lack of transparency around its deliberations over which
non-banking firms should be designated as “systemically
important”, as well as the fact that CFPB is not governed
by a board composed of Senate-confirmed members.
Expanded definition of “fiduciary” under ERISA. The
Department of Labor (DOL) is widely expected to re-issue
a proposed rule that expands the definition of “fiduciary”
under ERISA, modifies a variety of “prohibited transaction
exemptions” and perhaps extends its jurisdiction to
include individual retirement accounts. The DOL faced a
barrage of industry criticism and bipartisan, bicameral
letter writing when it originally unveiled this proposal
several years ago, as it likely would have reduced
the amount of helpful information plan sponsors and
administrators shared with plan participants. DOL has
said repeatedly that it plans to move forward on this issue
in early 2015 but has not yet shared a revised proposal;
consequently, we assume the new proposal will be
substantially similar to DOL’s original proposal, which
is worrisome.
So while a number of observers have suggested that
2015 will look pretty much the same as 2014 despite
the Republican majorities in the House and Senate, we
beg to differ. We anticipate continued interest in moving
comprehensive tax reform, small but helpful changes
to the Dodd Frank Act, a series of aggressive oversight
hearings on range of relevant issues, and an extensive
education and lobbying campaign against any DOL
proposal that would make it more difficult for individuals
to access the information they need to successfully save
for retirement.
I N V E S T M E N T M A N AG E M E N T
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Voya Perspectives | Market Series | November 24, 2014
This commentary has been prepared by Voya Investment Management for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or
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are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events
to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to,
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Past performance does not guarantee future results.
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