Top Financial Regulators Speak Out Against Bill They Claim Gives the White House Authority Over Rulemaking

The heads of the Office of the Comptroller of the Currency, the Federal Reserve, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, the National Credit Union Administration, and the Federal Deposit Insurance Corporation have sent a letter to Senators Susan Collins (R-Maine) and Joseph Lieberman (I-Conn) about bill S. 3468: Independent Agency Regulatory Analysis Act of 2012. Lieberman is the chair of the Senate Committee on Homeland Security and Governmental Affairs, the committee to which S. 3467 has been referred.

The regulators believe that, if approved, the legislation would give the White House “unprecedented authority” over independent agencies’ rulemaking and policy functions. For example, would let the president of the United States mandate that independent agencies turn in proposed rules to the Office of Management and Budget for approval. It also would require the agencies to analyze the benefits and costs of new regulations, which is a process that they have up to now been exempt from.

The letter reminds Lieberman and Collins, who is a ranking committee member and a cosponsor of the proposal, that Congress set up the independent regulatory agencies to exercise policymaking functions separate from any administration’s control. By requiring that the agencies give their rulemakings to OMB’s Office of Information and Regulatory Affairs, say the regulators, the president would gain power to affect the rulemaking and policy functions of these agencies, taking away that independence. They also believe that the bill gets in the way of their ability to make needed rules in a timely way, which would likely lead to litigation.

Shepherd Smith Edward and Kantas, LTD, LLP founder and securities lawyer William Shepherd finds the regulators’ letter ironic: “With billions of lobbying dollars, Wall Street exercises tremendous power over legislators and legislation. Federal securities ‘regulators’ include only industry self-regulating organizations or the SEC. Problems with self-regulation are self-evident. Meanwhile, the SEC is run by former members of the securities industry and operated by hopeful future industry participants from those they are regulating. The SEC is part of the executive branch of our government, so why shouldn’t the chief executive have input into the SEC’s operations?”

Financial regulators are not the only ones opposing S. 3468. Some consumer groups also have taken a stand against the bill. In its own letter, the Americans for Financial Reform, which is made up of a coalition of organizations, also writes about how it believe the legislation would subject regulators to Washington’s authority. The group also argues that the legislation would create additional, unnecessary, and expensive requirements to the process that has to happen to complete oversight rules for the biggest banks while potentially delaying or derailing the financial safeguards that our economy needs for protection.

Read the letter to Lieberman and Collins (PDF)


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