House will take up bill to rein in the SEC’s regulatory power

House Majority Leader Eric CantorEric Ivan CantorGOP sees McCarthy moving up — if GOP loses the House Feehery: The governing party 'Release the memo' — let's stop pretending that Democrats are the defenders of the FBI MORE (R-Va.) said Friday that the chamber would take up consideration of legislation to create new restrictions on the parameters of regulations imposed by the Securities and Exchange Commission (SEC).

Penned by Rep. Scott GarrettErnest (Scott) Scott GarrettFive things lawmakers want attached to the trillion funding bill Bipartisan group of House lawmakers urge action on Export-Import Bank nominees Manufacturers press Senate to approve Ex-Im board members MORE (R-N.J.), the SEC Regulatory Accountability Act would require the agency to conduct cost-benefit analyses on any new rules to ensure that the intended results of added regulations are not outweighed by the expense of implementing them.

“Businesses must know that any rulemaking stemming from Washington bureaucrats will help them produce more jobs and not more red tape,” Cantor (R-Va.) said in a memo to House Republicans announcing the May legislative agenda.

Currently, most agencies are expected incorporate such analyses when developing major rules, which then come under review at the White House Office of Management and Budget (OMB). But rulemaking at the SEC and other so-called independent agencies is exempt from OMB review.

The Garrett bill, introduced in March, comes as the SEC and other financial regulators are writing scores of new rules required by the Dodd-Frank Wall Street reform law. The measure has attracted 15 co-sponsors.

In addition to measuring the costs and benefits of proposed rules, the SEC would be tasked with analyzing other options, “including the alternative of not regulating,” Garrett said upon introducing the bill.

“These common sense reforms are appropriate, pragmatic additions to our rulemaking process that should have been in place all along," he said.

The legislation has been panned by advocacy groups that defend the government's regulatory powers.

"There's no real need for this harmful legislation," said Amit Narang, a regulatory policy advocate at the nonprofit group Public Citizen.

Narang said the SEC already conducts cost-benefit analyses on proposed rules, often to the detriment of the final product. He said such reviews are often used by the financial industry as arguments to water down Dodd-Frank rules drafted in response to the economic crisis.

Those arguments are often accompanied by the threat of litigation, Narang said.