Subject: Update: Bills to Regulate Regulators
From: Dana <[email-masked]>
Date: Thu, 21 Jan 2016 20:34:48 -0500

Mike & Co. --
The legislative wheels in Washington are moving into gear slowly this year.   Everything will stop in its tracks though as the city becomes snowbound over the weekend.  Then when the streets clear, work will resume on some important regulatory bills, though they and everything else on the Hill will face tough sledding. 
Three of these bills making their ways through Congress that would have the biggest financial regulatory and political impact are reviewed below. 
Stay warm and dry. 
Best,
Dana
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There are three especially salient legislative regulatory initiatives being drafted or under consideration on the Hill that are more likely than most others to see votes in Congress and could have bearing at some point on the campaign or represent an opportunity in that context. 
•   The independent Agency Regulatory Analysis Act 
A bipartisan measure introduced by Sens. Portman, Warner, and Collins to apply CBA studies to financial rule making.  The bill, versions of which have been introduced since 2012 without success, authorizes the president, through the Office of Information and Regulatory Affairs, to require that the agencies conduct in-depth CBA in addition to considering “least burdensome” regulations as well as the economic impact of their rules.  
Critics claim that the purpose of the bill is to inject political considerations into these agencies and that the requirements would impose not only a cost and time burden but would also limit the agencies’ ability to rapidly respond to crises and drain resources.   Two agencies, the SEC and CFTC, are already required to undergo a type of cost-benefit analysis.  Traditional CBA, critics say, aren’t even an applicable method of accounting when dealing with these agencies.  
One of the bill’s own co-sponsors, Susan Collins, spoke out against this very policy proposal only a few years ago, saying “If you bring these independent agencies within the regulatory purview of OIRA, you defeat the whole purpose of having them be independent agencies.”
CBA is one of rallying calls for opponents of the Dodd-Frank law to raise questions about agencies in an attempt to stall or overturn regulations.  In fact, opponents have had a number of successes with that approach in the last decade.  Sen. Portman defended the bill, saying “(the agencies are) independent, so they should be immune from political influence -- but they shouldn't be immune from the laws of economics and common sense.”  
Given the political climate of the upcoming election year, as well as the past failures of this bill, it’s not likely that this legislation will take root but keep an eye on this bill, because it could make it even more difficult to implement remaining Dodd-Frank rules.   
 •    SEC/Political Disclosure Rule 
Sen. Elizabeth Warren said on a conference call today that “shareholders have a right to know how companies spend their money.”   To that end, she and Sens. Schumer, Menendez, and Merkley have called on the SEC to draft a rule which would require that publically held companies disclose their political contributions to trade associations and political nonprofits.
Though the omnibus government spending bill passed last month includes language preventing the commission from finalizing a corporate political disclosure rule, “there is nothing preventing the SEC from preparing the rule this year," per Warren.  Sen. Schumer said that language preventing such a rule could be “ripped out root and branch” during the next Congressional appropriations cycle, leading the way for the SEC to finalize the requirement. 
This past August, 44 Senators sent the SEC chair a letter calling for political spending disclosure.  In October, eight of the 10 Democrats on Banking wrote to the two nominees for SEC commission, expressing their support.  The bill would be staunchly opposed by the GOP and business groups.   But due to support inside Congress and from the public, and with Sen. Warren championing this initiative, observers should watch closely – while the rule may not be particularly viable, the fight which it will stir up is the real prize involved. it will remain an issue to be closely watched in the coming months.  
•   The DOL Fiduciary Rule
Rep. Wagner’s Retail Investor Protection Act passed the House in October and has been referred to Senate Banking.  The bill restricts the Department of Labor from drafting any rules concerning when an individual is considered a fiduciary until 60 days after the SEC issues a final rule governing the standards of conduct for brokers and dealers.
It also prevents the SEC from writing such a rule until it has reported to particular congressional committees on a number of related matters, including the impact of such rules (or their absence) on retail investors and whether or not a standard fiduciary code of conduct would “adversely impact retail investor access to personalized, cost-effective investment advice and recommendations.”   The goal of this legislation may be to entangle the two organizations so fully that they cannot properly carry out their mandates. 
Tying up the DOL and SEC’s rule-making abilities by connecting the two organizations is another step in the fight from the right against the current regulatory climate.  Attempts to bog down regulators in regulations of their own, a sort of double-stack of regulations, may be a hallmark of this legislative year.

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Recent Updates

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Sanders' Tax/Healthcare Policy  (Jan 20)
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2016 Tax Agenda on the Hill  (Jan. 16)
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