Chairman Jeb Hensarling

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Requiring Regulatory Accountability at the SEC
Posted by on May 13, 2013

Problem:

As an independent agency, the Securities and Exchange Commission (SEC) is not currently subject to President Obama’s Executive Order No. 13563. The order directs non-independent executive branch agencies to perform a cost-benefit analysis on proposed regulations, tailor those regulations to impose the least burden on society, and retrospectively analyze old rules to identify those ripe for repeal.

Example:

Last year, the U.S. Court of Appeals for the DC Circuit unanimously concluded that in promulgating a rule related to corporate board elections, the SEC “inconsistently and opportunistically framed the costs and benefits of the rule; failed to adequately quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters.”

Solution:

H.R. 1062 would essentially codify President Obama’s E.O. No. 13563 with regard to the SEC.  It would require the SEC to: 

  • Perform a cost-benefit analysis of proposed regulations
  • Identify and assess alternatives to those regulations
  • Tailor regulations to impose the least burden on society
  • Choose the regulatory approach that maximizes net benefits
  • Review existing regulations within one year of enactment
H.R. 1062, introduced by Capital Markets Subcommittee Chairman Scott Garrett, is scheduled for a vote in the full House this Friday. 
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