3 Biggest Regulatory Cliffhangers Left By The Obama Administration

From diminished regulation of marriage to the enactment of the Dodd-Frank Act, former President Barack Obama saw monumental policy changes throughout his eight-year tenure.

Some last-minute efforts were hindered, though. Here are three of the most significant:

Mandating Fiduciary Status

In an effort to save investors $17 billion annually in unnecessary fees, Obama instituted a rule effective this April requiring all advisers to become fiduciaries.

As of date, advisers can legally place personal financial interests over those of clients. Those awarded kickbacks for securing certain investments can push retirement clients toward funds that aren’t necessarily the most profitable.

Obama finalized the new rule in April 2016, Republicans opposed it, and, in June, Obama vetoed a congressional resolution to block it.

It is yet unclear whether President Donald Trump will interfere with its enactment, but a repeal could bolster the Financial Select Sector SPDR Fund XLF.

Expanding Overtime Eligibility

About 4.2 million Americans were expected to benefit from an extension of overtime eligibility, but White House efforts were stymied by a federal judge in November. The Labor Department appealed the injunction December 1 only to watch Trump freeze the pending regulation January 24.

Under the new policy, employers would have had to pay time-and-a-half for workers with annual earnings below $47,476 and weekly hours above 40. The previous earnings threshold was $23,660.

While Paycom Software Inc PAYC expected to profit from the changes, certain retail chains such as Dollar Tree, Inc. DLTR and Dollar General Corp. DG would have faltered.

Amid ambiguity of the new policy's fate, The SPDR S&P Retail (ETF) XRT reacted positively to news regarding deregulation and negatively on reports of heightened regulation.

Cutting Out Private Prisons

In August, the government announced a plan to phase out private prison use for federal inmates.

The move reflected insight from former acting Attorney General Sally Yates, who advised the Bureau of Prisons to reduce the scope of existing contracts or let them expire, entirely. Yates argued that private facilities were relatively ineffective compared to public institutions.

The Bureau of Prisons began contracting private prisons in 1997 to address overcrowding, but a steady decline in incarceration recently rendered the outsourced service unnecessary.

The abandonment of contracts was slated to harm business for The GEO Group Inc GEO and Corecivic Inc CXW. In 2014, the U.S. Department of Justice reported $639 million in contracts with these and one other private company.

In December, the Department of Homeland Security Advisory Council announced that the administration would continue private contracts, and many expect Trump to maintain them throughout his term.