Financial reform advocates are crying foul over a pair of bills set to pass the House, arguing they are aimed at jamming regulators and exposing rules to new court challenges.
The House is preparing to consider two bills, HR 50 and HR 527, that Republicans argue will provide some much-needed regulatory relief for small businesses, while ensuring that regulators take into consideration the impact of their rules as they write them.
{mosads}But backers of tough Wall Street rules see the legislation as opening new doors for industry to take regulators to court, or requiring watchdogs to jump through even more hoops to write rules.
“These bills, in slightly different and overlapping ways, basically put another thumb on the scale,” said Lisa Donner, executive director of Americans for Financial Reform. “But I would say it’s a lot heavier than a thumb. It’s another fist on the scale.”
One bill, HR 50, is sponsored by Rep. Virginia Foxx (R-N.C.), and would allow additional court challenges to rules on the basis of the agency’s analysis of respective costs and benefits created by the rule. The measure is currently sponsored by two Republicans, as well as two Democrats. And previous versions of the bill passed the House with bipartisan backing.
“This legislation is purely about making government work better for the American people by requiring openness and honesty from Washington about the true cost of regulations, whether those costs come in dollars or in lost jobs,” said Foxx.
The second measure, from Rep. Steve Chabot (R-Ohio), would require regulators to take more factors into consideration when determining the relative costs and benefits of writing new rules. Furthermore, the bill would require regulators to take into special consideration the needs of small business.
In a statement on the bill, the White House said it agreed that small businesses should enjoy alternate regulatory approaches, but would veto the bill because it would “seriously undermine the ability of agencies to execute their statutory mandates.” The president also threatened to veto the other measure, making their ultimate enactment unlikely.
After Congress included some rollbacks to the financial reform law in funding legislation at the end of 2014, the White House has doubled down on a message of blocking further attempts to chip away at the law. The administration has already threatened to veto both bills, arguing they would impede the ability of agencies to write and implement important rules by subjecting them to burdensome new requirements and extra legal exposure.
In a January editorial in The Washington Post, Treasury Secretary Jack Lew said not only would the administration try and block explicit efforts to roll back Dodd-Frank, but also “disguised attacks…that would make it easier for opponents of Wall Street reform to use the courts to stymie the regulatory process.”
The bills apply to all government regulation efforts, but financial reform advocates are particularly worried about what it could mean for Dodd-Frank.
Dennis Kelleher, president and CEO of the pro-reform group Better Markets, said Foxx’s bill would “cripple” regulators.
And Donner said the bills would “make it much easier for the narrow but well-funded interests of Wall Street and of other parts of regulated financial sector to block rules or to shape them so that they are ineffective.”
Cost-benefit analysis has already proven to be problematic for Dodd-Frank implementation. In 2011, the Securities and Exchange Commission saw one of its first Dodd-Frank rules rejected by a court that said the regulator failed to properly conduct the analysis, and other regulators have also been sued over the same issue.