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The House Financial Services Committee passed late Thursday the SEC Regulatory Accountability Act, H.R. 2308, which requires the Securities and Exchange Commission, in accordance with President Barack Obama’s executive order, to conduct robust cost-benefit analysis on each new rulemaking.
Rep. Scott Garrett, R-N.J. (left), chairman of the Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, introduced the bill in June with 15 original cosponsors. The bill now goes to the full House.
The SEC Regulatory Accountability Act requires the SEC to conduct robust cost-benefit analysis on each new rulemaking to ensure that its benefits do not outweigh its costs, and would make certain that all new and existing regulations are accessible, consistent, written in plain language, and easy to understand.
Rep. Barney Frank, D-Mass., ranking minority member on the financial services committee, said in a statement that the effect of the legislation "would be to cripple the ability of the SEC to carry out its regulatory functions, and make it difficult to protect investors even when the SEC has evidence of wrong-doing. The bill would also increase operating costs for the agency without increasing its budget, thereby forcing it to divert funds from other actions such as enforcement."
The bill passed the full committee on a strictly party-line vote, with 30 Republicans voting in favor of the legislation and 26 Democrats opposing it, Frank noted.
Under pressure from Congress, the SEC has pushed back release of its proposed rule putting brokers under a fiduciary mandate so that economists and staff at the agency can perform a more detailed cost benefit analysis on the rule. SEC Chairman Mary Schapiro says a proposed fiduciary rule will be released this year, and announced Jan. 13 that the SEC planned to ask the public to weigh in on the cost/benefits of a fiduciary rule.
“Without question, the onslaught of regulations coming out of the Obama administration over the past few years has led to massive uncertainty in the economy and paralyzed our recovery,” said Garrett, in a statement. “If we expect American businesses to lead our recovery, we have to make it easier for them to grow and create jobs in the U.S. House Financial Services Republicans answered their call today by passing the SEC Regulatory Accountability Act.”
Garrett said the bill “takes the first step in fighting back many of the onerous and unnecessary regulations by requiring the SEC to carry out a thorough cost-benefit analysis of both new and existing rules.” Furthermore, he said, “this bill would ensure that the complex rulemaking process is more transparent and easier to understand.”