Tuesday, August 19, 2014

House Panel Approves Bi-Partisan Legislation Mandating Cost-Benefit Analysis of Volcker Rule Updates

The House Financial Services Committee has approved and reported out to the House floor bi-partisan legislation, H.R. 3913, that would require the five federal financial regulators that adopted the Volcker Rule, SEC, CFTC. Fed, FDIC and OCC, to conduct a cost-benefit analysis of any modifications of the Volcker Rule or any future rulemaking undertaken pursuant to the Dodd-Frank Act Volcker Rule provisions. The sponsor of the legislation, Rep. Sean Duffy (R-WI), noted that a cost-benefit analysis of the Volcker Rule was never conducted. However, he continued, the legislation is not retroactive. Thus, H.R. 3913 mandates a cost benefit analysis when the Volcker Rule is updated. It mandates a prospective cost-benefit analysis when the Volcker Rule is modified.

The Chair of the Committee, Rep. Jeb Hensarling (R-TX) supported the bill, noting that, as a general principle, the benefits of a regulation must be weighed against the cost and the Volcker Rule should be no exception. It is a modest and narrowly tailored piece of legislation, added the Chair. However, the Committee’s Ranking Member, Rep. Maxine Waters (D-CA), noted that the bill will discourage any necessary modifications of the Volcker Rule.

After initially being approved by a voice vote, a later and requested recorded vote on H.R. 3913 revealed some bi-partisan support for the legislation.