WASHINGTON — Sen. Richard Shelby has introduced legislation that would require federal agencies to demonstrate the usefulness of potential financial regulations in a more rigorous way before they could be adopted.
Titled the "Financial Regulatory Responsibility Act of 2011," the bill would require, among other steps, a 12-part analysis before a financial regulator could issue a notice of proposed rulemaking.
For example, regulators would have to conduct an analysis of adverse impacts that would result from the regulation. They would also have to explain why the private market and state and local governments could not solve the problem being addressed. And they would have to conduct a detailed analysis of benefits and costs, including compliance costs, regulatory administrative costs, and effects on economic activity.
"American job creators are under siege from the Dodd-Frank Act," Shelby said in a press release. "In their rush to expand the reach of government into our private markets, congressional Democrats refused to consider the impact of the Dodd-Frank Act on economic growth or job creation. As a result, regulators are about to subject those who had nothing to do with the financial crisis to hundreds of new rules and regulations without determining whether the benefits exceed the costs."
Financial regulations are already subject to a cost-benefit analysis, but in July a federal appeals court rule that the Securities and Exchange Commission did not properly conduct that analysis before finalizing a rule required by Dodd-Frank.
Shelby's bill seems unlikely to attract Democratic support in the Senate, but even if the bill goes nowhere, the recent court decision is expected to slow down the Dodd-Frank implementation process.
The bill is being co-sponsored by the remaining Republicans on the Senate Banking Committee, and it also has the support of the U.S. Chamber of Commerce.
