Regular readers may recall the Sturm und Drang that accompanied the introduction earlier this year of the Financial Institutions Examination Fairness and Reform Act, a bi-partisan effort to introduce the virus of due process into the examination process. Federal financial institution regulators had a veritable cow over the prospect that the Fifth Amendment might impede their ability to do what they want, when they want, and if you don't like it...tough nuggies.
A couple of months ago, some legislators on both sides of the aisle got another bee in their bonnets and tried to pull a similar fast one on the bank regulators in the form of the Independent Agency Regulatory Analysis Act. That heinous concoction would subject bank regulations to considerations that apply to other federal regulations, a prospect that caused projectile vomiting across the FI regulatory spectrum (paid subscription required).
The legislation would authorize the president to require all independent agencies to take up to 13 additional steps before proposing a rule, including measuring its costs and benefits. The bill could face a mark-up in the Homeland Security and Governmental Affairs Committee in the lame duck session following the Nov. 6 elections.
But in a letter obtained by American Banker, financial regulators warn that the bill would transform the role of independent agencies and undermine their authority.
"This would give any President unprecedented authority to influence the policy and rulemaking functions of independent regulatory agencies and would constitute a fundamental change in the role of independent regulatory agencies," says the Oct. 26 letter to panel chairman Joseph Lieberman, I-Ct., and ranking member Collins.
The letter was signed by Federal Reserve Board Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Schapiro, Comptroller of the Currency Thomas Curry, Federal Deposit Insurance Corp. Acting Chairman Martin Gruenberg, Consumer Financial Protection Bureau Director Richard Cordray and National Credit Union Administration Chairman Debbie Matz.
"Beyond injecting an administration's influence directly into our rulemaking, the bill also would interfere with our ability to promulgate rules critical to our missions in a timely manner and would likely result in unnecessary and unwarranted litigation in connection with our rules," the letter says. "We urge you to consider the potential negative consequences of this bill before proceeding with it legislatively, and would be happy to discuss it in more detail at your convenience."
Consumer adovacy groups also waxed apoplectic and apocalyptic.
"This bill would undercut the ability of independent federal agencies like the Consumer Financial Protection Bureau, the Consumer Product Safety Commission and the Federal Trade Commission to protect consumers from predatory financial schemes, dangerous consumer products and costly, anti-competitive practices," the groups wrote in a Sept. 13 letter.
"Most significantly for consumers, S. 3468 imposes duplicative and time-consuming requirements on independent agencies to conduct cost-benefit analyses of proposed protections."
Gee, I can see how everyone would be concerned about "duplicative and time consuming requirements" putting a speed bump in the fast lane to burying banks and credit unions under thousands of pages of mind-numbing, soul-crushing, pocketbook-draining regulations.
Senator Portman, one of the bill's principal sponsors, is buying none of the blowback.
"Independent agencies exercise vast power over major sectors our economy — from telecom, to agriculture, to financial services — but they are exempt from commonsense requirements including cost-benefit analysis of major regulations to ensure they do more good than harm," Portman said in an Aug. 1 press release.
"This bill would close the loophole for independent agencies by authorizing the president to bring them within the same regulatory review framework that applies to other agencies. This is a bipartisan, consensus reform with broad support, and it will promote a more stable regulatory environment for economic growth and job creation."
Subjecting bank regulators to the same standards that other federal agencies must abide by? How radical!
Notwithstanding its "broad, bi-partisan support," the chances of it being enacted are slim to none, this session. However, bills like this are laying down markers for 2013. Let's hope that by that time, we have a White House and Congress that won't listen to Chicken Littles in the regulatory arena.