Wednesday, February 16, 2011

Senate Banking Committee Republicans Question SEC and CFTC on Their Regulatory Implementation of Dodd-Frank

Ahead of a Senate Banking Committee hearing on the regulatory implementation of the Dodd-Frank Act, Committee Republicans have asked the SEC, the CFTC and other federal financial regulators to respond to a series of questions on their implementation efforts. Regulators must not compound the mistakes of Dodd-Frank by promulgating uninformed rules, said Ranking Member Richard Shelby (R-ALA).
Specifically, the regulators are asked whether they are providing at least 60 days for public comment on all proposed rules and studies required by the Dodd-Frank Act.

The Committee members have also asked the regulators to explain the steps that their agencies are taking to ensure that the rules they adopt under Dodd-Frank are the least burdensome way to achieve the statutory mandate. In so doing, they should provide documentation about how those steps satisfy their obligations under the Administrative Procedure Act and other applicable statutes to conduct cost-benefit and economic impact analyses.

Further, the Senators have asked for an explanation of the steps that are being taken to ensure that all empirical data and economic analyses submitted by commenters is thoroughly considered before a final rule is adopted. In many instances, noted the members, the Dodd-Frank Act requires agencies to coordinate rulemaking and promulgate joint rules. In that regard, the SEC and other regulators are asked to list the steps they are taking to ensure that their agency is acting in coordination with other agencies charged with adopting related rules.

More specifically, the members want to know how each agency is coordinating with other agencies that regulate entities over which their agency has been given regulatory jurisdiction by Dodd-Frank. Further, given the importance of rigorous cost-benefit and economic impact analyses and the need for due consideration of public comments, the regulators are asked if additional time for adoption of the Dodd-Frank rules would improve their rulemaking process and the substance of the final rules. On the House side, Chairman Spencer Bachus of the Financial Services Committee has asked the SEC and the CFTC if they need more time in adopting the derivatives regulations under Title VII of Dodd-Frank.