Obama slams House bill to require more economic analysis by U.S. SEC
WASHINGTON May 15 (Reuters) - The Obama administration came out swinging on Wednesday against a Republican-backed U.S. House bill that would require federal securities regulators to conduct more economic analysis on the industry rules they adopt.
The bill, which is sponsored by Republican Representative Scott Garrett of New Jersey and co-sponsored by 23 other Republicans, is scheduled for a vote on the House floor this Friday.
The Securities and Exchange Commission is already required under current law to consider the impact its regulations would have on competition, efficiency and capital formation.
However, Garrett's bill would impose even more requirements on the agency, by forcing it to take extra steps to evaluate the economic impact of its rules and review all of its existing regulations every five years to determine whether they are out of date.
In addition, it would require the SEC to follow up after completing certain major rules to make sure they achieved their stated purpose.
In a statement released Wednesday, the White House Office of Management and Budget said it values the use of cost-benefit analysis in rulemaking, but that the House bill goes too far.
The bill "would add onerous procedures that would threaten the implementation of key reforms related to financial stability and investor protection," the administration said.
"The bill would add analytical requirements that could result in unnecessary delays in the rulemaking process, thereby undermining the ability of the SEC to effectively execute its statutory mandates."
Republicans and business groups have in recent years used the issue of cost-benefit analysis as a successful tool to defeat or slow down rules they have opposed.
The U.S. Chamber of Commerce, for instance, has won several legal challenges to SEC rules by arguing the agency had failed to properly weigh costs and benefits.
The SEC last year sought to bullet-proof its rules by beefing up its economic analysis. It drafted new guidance calling for its staff to rely more heavily on economists and to provide stronger justifications for its rules.
Two legal challenges related to SEC rules stemming from the 2010 Dodd-Frank Wall Street reform law are still pending in court.
However, since the memo was drafted, there has been a notable change in tone at the SEC, both in the pace of rulemaking and also in the attention it has paid to analyzing the impacts of its rules.
In addition, the Obama administration in July 2011 issued an executive order targeting federal independent agencies and calling on them to periodically review regulations to ensure they are not outdated or burdensome.
Garrett, in an interview with Reuters, said he was astonished that Obama is opposing the bill, calling it a "quintessential common-sense bill."
"It basically mirrors his executive order... that essentially says much the same thing - that you should do a cost versus benefit analysis," Garrett said. While Garrett's bill stands a good chance of passage in the U.S. House, it is not expected to make it to the floor of the U.S. Senate.
Meanwhile on Wednesday, the U.S. House also passed another SEC-related bill in a 416-6 vote.
That bill would impose a deadline on the SEC to complete work on a rule required by the 2012 Jumpstart Our Business Startups Act that would allow certain stock offerings below $50 million to be exempt from registration with the agency.
- Malaysian plane presumed crashed; questions over false IDs |
- China draws 'red line' on North Korea, says won't allow war on peninsula
- Warning shots fired to turn monitors back from Crimea |
- Malaysian plane crashed off Vietnam coast: state media