Sen. Richard Shelby, R-Ala., ranking GOP member on the Senate Banking Committee, introduced a bill on Thursday that requires financial regulators—like the Securities and Exchange Commission—to provide rigorous and consistent economic analyses on new rules they propose.
The bill, the Financial Regulatory Responsibility Act of 2011, is co-sponsored by all Republican members of the committee and requires regulators to provide “clear justification for their rules, and to determine the economic impacts of proposed rulemakings, including their effects on growth and net job creation.” The legislation also mandates that if a regulation’s costs outweigh its benefits, regulators would be barred from promulgating the rule.
“American job creators are under siege from the Dodd-Frank Act,” said Shelby, in a statement announcing the bill. “In their rush to expand the reach of government into our private markets, Congressional Democrats refused to consider the impact of the Dodd-Frank Act on economic growth or job creation. As a result, regulators are about to subject those who had nothing to do with the financial crisis to hundreds of new rules and regulations without determining whether the benefits exceed the costs.”
In a Sept. 15 letter to Shelby, R. Bruce Josten, executive vice president of government affairs for the U.S. Chamber of Commerce, said the “use of cost-benefit analysis in rulemaking is a significant issue of public policy.” Shelby’s bill, he continued, and “is particularly pertinent in light of the hundreds of rulemakings mandated by the Dodd-Frank Act, and in the wake of the recent decision of the DC Circuit Court of Appeals … vacating the proxy access rule because the appellate court concluded that the Securities and Exchange Commission ‘failed once again adequately to assess the economic effects of a new rule.’”
Shelby also sent a letter to Senate Banking Chairman Tim Johnson, D-S.D., requesting a hearing on the Financial Regulatory Responsibility Act of 2011.