WASHINGTON — The House approved legislation requiring the Securities and Exchange Commission to perform cost-benefit analysis of its regulations, which Republicans characterized as common sense and Democrats decried as an attempt to weaken federal oversight.
The SEC Regulatory Accountability Act of 2013, offered by Rep. Scott Garrett, R- N.J., passed by a heavily partisan vote of 235-151 on Friday. Garrett introduced the legislation in March to help prevent overregulation that would stifle potential business growth, he said. The bill would require the SEC’s chief economist to produce a report about new regulations, weighing their economic impact against viable alternatives.
It would also require comprehensive reviews of SEC regulations every five years. Speaking to colleagues during floor debate Friday, Garrett said his bill represents “common-sense” reform.
“A stronger commitment to economic analysis by the SEC is absolutely essential,” Garrett said.
Rep. Jeb Hensarling, R- Tex., who chairs the House Financial Services Committee, said the agency needs to be measuring its actions “kitchen table economics” and that Garrett’s bill is simple and clear.
“It simply says that the Securities and Exchange Commission has to adopt cost-benefit analysis to ensure that the advertised benefits of one of their rules is measured against the actual cost of what they are doing,” Hensarling said.
Democrats responded to the bill with outrage, and new SEC chairman Mary Jo White said she had some concerns that the measure could hamper the agency’s rulemaking process. The bill is unlikely to become law, because the Senate’s Democratic majority probably will not bring it up for consideration and Obama has suggested he would veto it if it came to his desk.
“The purpose of this legislation is to stop implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act dead in its tracks,” said Rep. Maxine Waters, D-Calif.
Rep. Gwen Moore, D-Wis., who is a cosponsor of a bipartisan bill with Rep. Steve Stivers, R-Ohio, to define municipal advisors, said the Garrett bill would raise “intractable barriers” to SEC regulation. House minority whip Rep. Steny Hoyer, D-Md., released a statement blasting what he characterized as Republican efforts to tie the hands of federal regulators.
“Their bill to raise new barriers to oversight of financial practices comes on the heels of a near-collapse of our financial system exacerbated by the unsavory practices that Securities and Exchange Commission regulators are working hard to expose and prevent,” Hoyer said.
White said in testimony to the House Financial Services Committee Thursday the SEC is already doing a very good job with cost-benefit analysis, which it is supposed to do as a matter of policy under a presidential executive order issued in 2011.
Hensarling said Friday that these practices have not materialized despite Obama’s apparent commitment to cost-benefit analysis.
“The president says he wants to do it, he’s just not going to do it,” Hensarling told colleagues.
Following the bill’s passage, Garrett said the measure seeks only to target unnecessary and outdated regulation, and he urged the Senate not to ignore it.
“We can all agree that certain regulation is necessary,” he said. “Therefore, we should also all agree that unnecessary and ill-conceived regulations that stunt economic growth and job creation should be eliminated. I applaud the House for passing this pro-growth jobs bill, and I call on the Senate to do the same immediately.”