GOP hopes to rein in SEC rulemaking with new legislation

By Megan R. Wilson - 03/12/13 05:45 PM ET

Rep. Scott Garrett (R-N.J.) reintroduced legislation on Tuesday that would require the Securities and Exchange Commission (SEC) to thoroughly examine costs and benefits before it proceeds with regulations.

There are two Executive Orders that require agencies to ensure proposals are crafted with costs in mind, but the SEC – as well as other independent agencies – is exempt from them.

Outside of the piece of legislation – the SEC Regulatory Accountability Act of 2013 – there is no congressional statute requiring the SEC to weigh costs and benefits, but it is something the agency says it already considers a priority.

“This bill would require the SEC to abide by President Obama’s Executive Order by way of ensuring that the benefits of any rulemaking outweigh the costs, and that both new and existing regulations are accessible, consistent, written in plain language, and easy to understand,” Garrett said in a statement. “These common-sense reforms are appropriate, pragmatic additions to our rulemaking process that should have been in place all along,” Garrett said.

The GOP congressman originally introduced the bill in 2011 and it picked up 19 co-sponsors. However, it never reached the House floor for a vote.

The Obama administration's nomination for SEC commissioner, Mary Jo White, met with Senate lawmakers on Tuesday, who probed for her regulatory priorities.

"I don't think there's anything more important than vigorous and credible enforcement," White told lawmakers at her confirmation hearing. "It must be done."

She also echoed her predecessor's desire to thoroughly vet rule makings with analysis.

Business groups have challenged the regulator’s ability to draw-up rules without first performing an adequate test of the prospective costs and expected benefits – and won all three times. Courts have ruled that the regulator had to implement more analysis into its proposals, which prompted guidance from the agency that outline the strict evaluation each regulation must undergo.

The Dodd-Frank financial reform law remains mostly unimplemented, which regulators say is partially due to the strict and timely directives for review.