House Financial Services Committee Republicans Pass Legislation to Hamstring the SEC
The House Financial Services Committee today passed four bills, including controversial legislation (H.R. 2308) which would require the Securities and Exchange Commission to conduct cost-benefit analyses and periodic reviews on all rulemakings and most orders that it issues.
The effect of the legislation would be to cripple the ability of the SEC to carry out its regulatory functions, and make it difficult to protect investors even when the SEC has evidence of wrong-doing. The bill would also increase operating costs for the agency without increasing its budget, thereby forcing it to divert funds from other actions such as enforcement.
The bill passed the full committee on a strictly party-line vote, with 30 Republicans voting in favor of the legislation and 26 Democrats opposing it.
The debate over the legislation, which was authored by Congressman Scott Garrett (R-NJ), revealed sharply different views of stricter regulation of the financial services industry. Republican Members claimed that possible costs to the industry would be burdensome; Democrats cited the tangible cost the financial crisis already has had on American families.
Today’s events follow an increasingly heated eighteen-month battle over financial regulation following the passage of the 2010 Wall Street Reform and Consumer Protection Act. The landmark legislation, which passed with overwhelming Democratic and almost no Republican support, has proven popular with an American public skeptical of the benefits of lightly-regulated financial markets.
Republicans, apparently apprehensive about a frontal assault on the law, have mounted a multi-pronged stealth attack to weaken it. In the 112th Congress they have attempted to significantly underfund the agencies charged with administering the law; Senate Republicans have refused to appoint anyone to head the Consumer Financial Protection Bureau (forcing a recess appointment by President Obama); and House Republicans have fought to pass legislation to weaken the CFPB.
Today’s vote to hamstring the SEC opens a new front in the battle over financial reform. Congressman Barney Frank, Ranking Member of the House Financial Services Committee, called the bill “an attempt by proxy to cut back on financial regulations.”
Several vivid moments from the debate can be found at this link.