Jamie Dimon, chief executive officer of JPMorgan Chase & Co., second left, listens during a House Financial Services Committee hearing in Washington, D.C., U.S., on Wednesday, April 10, 2019.

The Securities and Exchange Commission’s advice-standards package — which includes the much-debated Regulation Best Interest — is going to be backed up by a “robust” economic analysis, the agency’s chief says, but the securities regulator is still struggling with its advisor exam rate. Meanwhile, President Donald Trump nominated a new SEC Commissioner, a bill to revamp the Internal Revenue Service gets a nod from the full House, and House Financial Services Committee Chairwoman Maxine Waters grilled big bank CEOs on Capitol Hill.

Economic Analysis of Final Advice Standards Rule. Amid concerns that the SEC has not done a proper economic analysis of its advice standards package, including Regulation Best Interest, its chairman said in early April that the rule would be well-scrutinized.

“I’m very confident that the economic analysis that will accompany a final rule in the space will be robust,” SEC Chairman Jay Clayton told reporters on the sidelines of the Practising Law Institute’s annual SEC Speaks conference in Washington.

SEC Commissioner Robert Jackson said on March 14 that the commission’s “economic analysis was not a serious attempt to understand the effects of the rule,” leaving it open to legal attacks. He said that, while he had voted to put the package out for comment, he couldn’t support it in its current form.

“Fundamentally, this can and should be a bipartisan rulemaking at the commission,” Jackson said Monday at the SEC Speaks event. “That’s why I voted for the proposal and that’s why I’ve been working so hard to get there on the final.”

Jackson added that he remains “very, very hopeful that the four of us, or five of us, whatever the case may be [can] get there. That’s so important because a rule like this is going to be long litigated, not just in the D.C. Circuit.”

Clayton told reporters that a final vote on Reg BI was “on our agenda to get done before September.”

OCIE Exams. Fewer RIA exams will take place this year due to the government shutdown, Pete Driscoll, head of the SEC’s Office of Compliance Inspections and Examinations said at the SEC Speaks event. “We’re still struggling to have good coverage in the IA space,” Driscoll said, although OCIE should be able to add staff to the team this year.

“Our [advisor exam] numbers will be less this year because we lost 35 days” during the shutdown, Driscoll said, adding that OCIE will not hit the 17% exam rate reached last year. OCIE, however, is “still pushing forward on our priorities.”

Cybersecurity will continue to be a focus for OCIE, specifically around the areas of governance and risk assessment and data loss prevention, and with an emphasis on cybersecurity measures of advisors with multiple branch offices.

New SEC Commissioner Nominee. President Trump announced on April 3 that he has nominated veteran securities lawyer Allison Herren Lee to serve as an SEC commissioner, replacing former Commissioner Kara Stein.

Lee, who served at the SEC from 2005 to 2018 in various roles including senior counsel in the Complex Financial Instruments Unit, and as counsel to Stein, enters the agency as it nears a vote on its contentious advice-standards package, including Reg BI.

Lee, a Democrat, has been nominated to serve a term expiring June 5, 2022; if confirmed by the Senate, she will replace Stein, who left the commission in early January.

Since leaving the SEC, Stein has, among other things, lectured and taught courses in financial regulation and corporate law at Universidad de Navarra in Pamplona, Spain, and LUISS Universita Guido Carli, Dipartimento di Giurisprudenza in Rome.

IRS Redesign Bill Passes House. The Taxpayer First Act of 2019, which would redesign the Internal Revenue Service, passed the full House on April 9.

The legislation, H.R. 1957, which passed the House Ways & Means Committee on April 2, has bipartisan support in both chambers of Congress.

Rep. Kevin Brady, R-Texas, the top Republican on the House Ways and Means Committee, stated after the vote that “with a new tax code, it is time for a new tax administrator. I applaud the House for passing the Taxpayer First Act — a bold step to redesign the IRS to be an agency with one singular mission: putting taxpayers first.”

The bill refocuses the “agency to live up to its mission of serving taxpayers, overhauling the IRS’ tools of enforcement, and strengthening the IRS’ ability to proactively combat identity theft and fraud,” Brady said.

Brady encouraged “swift action” in the Senate to send this legislation to the president’s desk this year.

Among the bill’s 45 changes to the IRS includes creating an independent appeals process, strengthening the IRS’ ability to combat identity theft and tax refund fraud, and improving the taxpayer experience across the IRS’ suite of taxpayer services.

The legislation also would make it illegal for the IRS to create free tax preparation software. Sen. Ron Wyden, D-Ore., ranking member on the Senate Finance Committee, said in a statement after the vote that “again and again in my service in the Senate I have battled the tax-preparation software industry to simplify filing taxes for the typical American. In fact, the industry spent millions to fight my proposals in two tax-reform bills to allow a ‘simple return,’ which would require the IRS to send any American a pre-filed tax return on request using the agency’s tax information.”

Added Wyden: “During the debate on the tax administration bill, my staff pushed back on a prohibition on the agency competing with private tax preparation services, and I will continue to push for my proposal for the pre-filed ‘simple’ return and the principle that a taxpayer should not have to use a private company to pay their taxes online.”

Megabank CEOs Get Hill Grilling. At a hearing Wednesday featuring CEOs of seven of the eight U.S.-based global systemically important banks, the House Financial Services Committee chairwoman worried that “several of these institutions are simply too big to manage their own operations, too big to serve our communities and too big to care about the harm they have caused.”

The chairwoman, Rep. Maxine Waters, D-Calif., grilled the executives on how the banks had tightened operations and diversified since the financial crisis of 2008. Notably, CEO James Gorman of Morgan Stanley cited the bank’s wealth management operation as a “stable foundation.”

During their testimony, the CEOs also agreed that cybersecurity is the primary risk facing the banking sector today, with another top concern being slower global growth.

The banks as a group, Waters said, “have paid at least $163.7 billion in fines since the financial crisis a decade ago, including for consumer abuses and other violations of the law.” Waters argued that it “appears that they have treated those fines as simply the cost of doing business. All of the megabanks represented on the panel continue to rake in massive profits.

Since the crisis, the megabanks have collectively made over $780 billion in profits, or nearly five times the amount they paid in fines,” and the CEOs have continued to be rewarded handsomely despite compliance failures on their watch.

Waters questioned the CEOs on their banks’ downsizing moves since the financial crisis hit a decade ago.

Michael Corbat, CEO of Citigroup, responded that Citigroup had downsized “considerably,” eliminating 70 business lines.

“Has it made management easier?” Waters asked.

Corbat responded: “Yes, it has.”

When asked the question, Jamie Dimon, CEO of JPMorgan Chase & Co., responded: “We every year look at … businesses that cause problems and close them down. So the answer is yes,” saying 17 lines of business had been eliminated since the financial crisis.

“Has it made management better?” Waters asked.

“Sure,” Dimon responded.

Morgan Stanley has “downsized a number of different businesses,” stated James Gorman, CEO of Morgan Stanley.

Washington Bureau Chief Melanie Waddell can be reached at mwaddell@alm.com.