The Consumer Federation of America (CFA) is up in arms over a bill the House passed Thursday that not only stymies regulators in enforcing rules but halts all new non-emergency regulations until the unemployment rate exceeds 6% or in two years, whichever comes first.
The Congressional Budget Office (CBO) estimates the jobless rate will reach that level by 2016 at the earliest.
H.R. 4078, the Red Tape Reduction Act, which passed by a vote of 245-172, includes seven measures that the CFA says “collectively make it impossible for consumer protections to be developed and implemented.”
Barbara Roper, director of investor protection for CFA, told AdvisorOne that included in the package are provisions to increase cost-benefit requirements for both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
H.R. 2308, the SEC Regulatory Accountability Act, which was introduced by Rep. Steve Garrett, R-N.J., was rolled into the Red Tape Reduction Act. The bill subjects the SEC to President Obama’s executive order requiring enhanced cost-benefit analysis as well as a review of existing regulations.
After passage of the act on Thursday, Garrett said in a statement: “As our economy continues to remain in the slowest recovery since World War II and with unemployment remaining at or above 8% for the 41st consecutive month, I believe Washington must finally work to relieve America’s job creators from the burdens of unnecessary regulations and red tape.” Since taking office, he said, “the Obama administration has under review over 400 regulations each costing the economy at least $100 million.”
But Roper told AdvisorOne that “the SEC is already subject to economic analysis requirements that industry has used successfully to challenge agency rulemakings,” Roper says.
“The court decision in the proxy access case set an unreasonably high bar that the SEC is struggling to deal with as it implements Dodd-Frank,” Roper says, and “the CFTC has already seen two of its rules challenged on these grounds.”
Roper went on to say that “increasingly, commissioners who don’t like rule proposals frame their dissent in ways that are designed to provide support for just such a legal challenge. The legislation would make the problem worse by increasing the requirements for the agencies with regard to the analysis—requiring, for example, that they analyze every possible alternative regulatory approach—and increasing the avenues for legal challenge on these grounds.”
The same people who favor this approach, “also want to starve the two agencies of the funding they need to carry out their rulemaking obligations,” she says. “If they really cared about improving the agencies’ economic analysis—as opposed to just throwing additional sand in the wheels of the regulatory process—you’d think they be willing to fund it accordingly.”
Dale Brown, president of the Financial Services Institute (FSI), says FSI supports the Red Tape Reduction Act, as the small businesses operated by FSI members “need relief from costly regulations. In addition, they want to see the SEC and CFTC succeed in their mission of protecting the financial markets and the public from fraud while fostering open, competitive and financially sound securities, futures and option markets.”