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EXCHANGES AND MARKETS REGULATION-In Letter to Congress, SEC Warns of Impact of Independent Regulatory Analysis Act

By Jim Hamilton, J.D., LL.M

In a letter to Congress, SEC Chair Mary Schapiro expressed concern with S. 3468, the Independent Regulatory Analysis Act which, said the Commission, would give any President unprecedented authority to influence the policy and rulemaking functions of independent regulatory agencies and would constitute a fundamental change in the role of independent regulatory agencies. S. 3468 authorizes the President to require independent agencies to submit their rulemaking to the Office of Information and Regulatory Affairs (OIRA) for prior review. The letter, sent to Senate Homeland Security and Governmental Affairs Committee Chair Joseph Lieberman (I-CT) and Ranking Member Susan Collins (R-ME), who is a co-sponsor of S. 3468, was also signed by Fed Chair Ben Bernanke, Comptroller of the Currency Thomas Curry, Acting FDIC Chair Martin Gruenberg, and CFPB Director Richard Cordray. The Committee is considering S. 3468 for possible mark up before the end of the year.

Beyond injecting the influence of a Presidential Administration directly into agency rulemaking noted the letter, the legislation would also interfere with the SEC's ability to promulgate rules critical to its mission in a timely manner and result in unwarranted and unnecessary litigation in connection with SEC regulations.

The agencies explained that independent regulatory agencies were established by Congress to exercise policymaking functions, particularly rulemaking functions, independent of the control of any Administration. Independent regulatory agencies have sought to implement federal legislation in a manner faithful to the statutory language Congress has chosen, noted the letter, and consistent with the agency's mission without imposing unnecessary costs.

S. 3468, which has garnered key bi-partisan support, was introduced by Senator Mark Warner (D-VA), with Senators Rob Portman (R-OH) and Susan Collins (R-ME). S. 3468 would require independent federal agencies, such as the SEC and CFTC, to conduct a cost-benefit analysis of new regulations and tailor new regulations to minimize unnecessary burdens on the economy. The bill would also provide for review by the Office of Information and Regulatory Affairs of every proposed and final economically significant regulation, pegged at economic impact of $100 million or more, followed by a public exchange of views between OIRA and the independent agency concerning the quality of the agency's cost-benefit analysis. Although OIRA would not have the power to reject a regulation, it would place its evaluation of the agency's cost-benefit analysis in the public record. With regard to a cost-benefit analysis of federal regulations, Senator Warner said that the notion that there should be a distinction between independent federal agencies like the SEC and CFTC and executive agencies does not pass muster.

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