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Op-Ed

What new rules on inversions and fiduciary duties remind us about November

Remember all those obituaries for the Obama presidency, the premature ones that predicted he would get nothing done in the eighth year of his presidency because of a recalcitrant Congress?

Ask Pfizer about that. Ask the investment industry while you’re at it.

Much to the consternation of Republicans in Congress and their allies, the Obama administration has displayed a substantial amount of regulatory muscle this week.

New Treasury rules restricting the tax benefits from corporate inversions–the maneuver in which a U.S. company mergers with a foreign firm and shifts its headquarters to the other, lower-tax country–disrupted the merger of drugmakers Pfizer and Allergan. Perhaps the regulations will be tested in court, but they’ve already accomplished the administration’s major objective–and will give other companies pause before attempting inversions.

The Labor Department’s new “fiduciary rule”–which gives stockbrokers and mutual-fund salesmen the same legal duty that many other financial advisers already have to make investments in the best interests of their clients when selling retirement products–began to reshape the investment business even before the final rule was published.

Some would argue that these are the sorts of far-reaching policies that should be made by Congress. And Congress could, of course, change the law and undo these new rules. Indeed, the Treasury rules are a lousy substitute for a thoughtful reform of corporate tax policy. But Congress can’t seem to do anything substantial these days: It created a vacuum and the Obama administration is filling it.

Regardless of one’s views of the merits of either set of rules, this is a timely reminder that it really does matter who is elected president in November.

Editor’s note: This piece originally appeared on Wall Street Journal’s Washington Wire.

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