The House on Friday passed legislation that Republicans say is needed to stop burdensome Securities and Exchange Commission (SEC) regulations over the objections of Democrats who said the bill is an attack on the Dodd-Frank financial reform law.
This split led to a mostly partisan 235-161 vote on the SEC Regulatory Accountability Act, H.R. 1062. However, 17 Democrats joined all voting Republicans in supporting the bill.
The legislation reflects a key theme of the House Republican majority, which is that over-regulation by the federal government has been a major reason for slow U.S. job creation over the last few years.
Under the bill, the SEC would have to conduct strict cost-benefit analyses of new rules, and ensure that their benefits outweigh their costs. It would also force the SEC to conduct reviews of past regulations to be sure they are not overly burdensome.
Republicans added that the bill is needed in light of a 2011 ruling by the U.S. Court of Appeals for the District of Columbia. That court struck down an SEC rule aimed at giving shareholders more say over the membership of corporate boards, after finding that the commission failed to properly frame the costs and benefits of the rule.
But Financial Services Committee ranking member Maxine Waters (D-Calif.) and other Democrats said the bill is just the latest show of opposition to the Dodd-Frank law, which Republicans have held up — along with ObamaCare — as a Democratic regulatory overreach.
"Let's be clear: The purpose of this legislative effort is to stop implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act dead in its tracks," Waters said.
Several Democrats noted that Republicans have worked to limit funding to the SEC and other financial regulatory agencies in order to slow the implementation of the law.
During debate, Financial Services Committee Chairman Jeb Hensarling (R-Texas) acknowledged a link between the bill and Dodd-Frank. As one example, he cited analysis saying that the SEC's "Volcker rule," which would limit the ability of banks to engage in proprietary trading, could cost more than 1 million jobs.
Hensarling indicated that these sorts of factors need to be weighed more carefully at the SEC. The Volcker rule has been delayed for several years now as the SEC and other agencies wade through thousands of related comments.
Hensarling also argued that the bill puts the SEC on the same footing as other federal agencies covered by an executive order from President Obama. That order called on agencies to run cost-benefit analyses of their rules.
"So the president says he wants to do it, he's just not actually going to do it," Hensarling said, given the White House's opposition to the SEC bill.
Waters said the bill goes well beyond Obama's Executive Order, as it calls for retroactive assessments of existing regulations.
The Statement of Administration Policy released by the Obama administration this week said the White House opposes the bill, as it would "impede the ability of the SEC to protect investors, maintain orderly and efficient markets, and facilitate capital formation." But the statement did not go so far as to say Obama would veto the bill.
Obama's position on the bill is likely irrelevant, however, as it's unlikely that the Democratic Senate will consider the bill.
Before final passage, the House approved two GOP amendments to the bill, and rejected one Democratic amendment. They are from:
— Pete Sessions (R-Texas), requiring the SEC to assess estimated jobs gained and lost as a result of imposing new rules. Passed by unanimous consent.
— Robert Hurt (R-Va.), requiring the SEC to ensure that rules adopted by the Municipal Securities Rulemaking Board and other securities associations comply with the standards for rulemaking in the bill. Passed 233-163.
— Carolyn Maloney (D-N.Y.), replacing the bill with findings and a non-binding sense of Congress that the SEC is required to conduct economic analysis during rulemaking. Failed 165-233.