The House is likely to vote Friday on legislation that would require the Securities and Exchange Commission to conduct a cost-benefit analysis of any new regulations, a move Democrats see as a bid to weaken financial reform.
Rep. Scott Garrett, R-N.J. introduced H.R. 1062, the SEC Regulatory Accountability Act of 2013, in March to help prevent overregulation that would stifle potential business growth. The bill would make the SEC explicitly subject to President Obama’s 2011 Executive Order that reads in part: “each agency is directed to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.”
In practice, the bill would require the commission to clearly identify the nature of the problem that would be addressed before issuing a new regulation, and after that require economic analysis be performed by the SEC’s chief economist.
“These common sense reforms are appropriate, pragmatic additions to our rulemaking process that should have been in place all along,” Garrett said in a release.
But others on Capitol Hill see the legislation as a way to throw a wrench into the workings of the SEC, and perform an end-run around the Dodd-Frank Act.
“Not get around it, just eviscerate it,” one congressional staffer who preferred not to be identified said. “It’s designed to stop [the SEC] from doing anything,”
The bill would also require the SEC to weigh proposed regulations against any available alternatives, including the status quo, and to publish along with the rule a statement including comments received from stakeholders. It would make the commission perform regular house cleaning by evaluating all existing regulations to see which ones might have outlived their use.
“Not later than one year after the date of enactment of the SEC Regulatory Accountability Act, and every 5 years thereafter, the commission shall review its regulations to determine whether any such regulations are outmoded, ineffective, insufficient, or excessively burdensome, and shall modify, streamline, expand, or repeal them in accordance with such review,” the bill states.
House Financial Services Committee Democrats denounced the legislation in a statement.
“Not only does the bill impose an extremely high level of review for a new rule to be adopted, it requires the SEC to review all of its rules every five years,” the Democrats said. “This is essentially a recipe for an agency enmeshed in permanent litigation, unable to issue any new rules and potentially unable to maintain even its current rules.”
The bill is not expected to advance in the Senate, where Democrats control the majority and could choose not to bring the measure up for debate in committee.