President Obama on Monday asked independent agencies like the Securities and Exchange Commission to conduct a four-month review of existing rules aimed at eliminating burdensome regulations, a request that could further slow down the already sluggish implementation of the Dodd-Frank financial services reform law.
The president’s latest deregulatory initiative comes almost exactly one year after the passage of Dodd-Frank, the post-financial crisis reform law that called for nearly 300 new regulations on banks, commodities traders and other financial service firms whose failure would pose a systemic risk to the U.S. economy. Many of those regulations are being written now by the same agencies targeted by the administration’s latest deregulation initiative.
The request also comes just six months after the president, stung by steep losses in the mid-term elections, sought to shore up his standing in the business community by issuing a mandatory review of regulations issued by executive branch agencies. Those include cabinet departments like the Occupational Safety and Health Administration and cabinet-level agencies like the Environmental Protection Agency.
This latest executive order – dubbed “historic” by Office of Management and Budget regulatory czar Cass Sunstein – comes in the form of a request since the president does not have direct authority over independent agencies like the SEC, the Commodities Future Trading Commission or the Nuclear Regulatory Commission.
“Our expectation is that the public will welcome this and some of the agencies will welcome this,” Sunstein said. “This process . . . frees up money and frees up business, especially small business, to do what they do best, which is to create jobs.”
Earlier Monday, Rep. Barney Frank, D-Mass., the ranking member of the House Financial Services Committee, said agencies like the SEC and CFTC had fallen behind in implementing the law that carries his name due to a deliberate strategy by House Republicans to deny them the resources needed to get the job done. “It’s a Catch-22,” he told reporters during a speech at the National Press Club. “First deny the SEC and CFTC funding. Then complain they have been slow to implement rules; then repeal the rules.”
Despite the lack of new funding at the agencies, Sunstein said the president’s initiative could be carried out without jeopardizing implementation of Dodd-Frank. The agencies “can walk and chew gum at the same time,” Sunstein asserted. “Agencies (should) go forward with what is legally mandated and beneficial to the public while not going forward with regulations that are not mandated and beneficial to the public.”
However, advocacy groups dealing with the after effects of the first presidential order say that the January initiative clearly slowed the pace of implementation of some much-needed regulations. “It certainly sent a signal to the EPA to slow down and think about anything that would upset industry,” said Frank O’Donnell, executive director of Clean Air Watch, an environmental advocacy group.
In May, the EPA reopened public comment on new rules governing the emission of toxic air pollutants from the nation’s 13,800 industrial boilers, which produce electricity on-site at factories and other industrial facilities. The proposal, which had been years in the making and would save an estimated 6,500 premature deaths a year at a cost of approximately $1 billion to industry, has now been postponed until at least next April.
The EPA’s new ozone rules, which were slated for completion last year and now have been delayed three times, were due out in the end of July. According to O’Donnell, nothing has been sent to OMB for review. “Re-election politics are having a real impact on agencies who are supposed to be protecting the public’s health and well-being,” he said.
Sunstein said expanding the review to independent agencies was the brainchild of the president’s Jobs Council, which is chaired by GE chairman Jeffrey Immelt, who spent Monday at the U.S. Chamber of Commerce discussing how to create jobs. Like the first deregulatory initiative, agencies that go along with the president’s request over the next four months will develop plans for limiting paperwork and eliminating outdated regulations. Those plans will then be put out for public comment and implementation.
Though Sunstein said the first initiative has already saved business over $1 billion in regulatory compliance costs and eliminated “millions of hours in paperwork,” some pro-regulation observers of the process say not much has happened yet beyond the high-profile EPA rules that have been put on hold. “Until we see final plans from these agencies, we’re not going to know what impact this will have,” said Rick Melbert, director of regulatory affairs at OMB Watch.
More coverage from The Fiscal Times:
Extreme Bank Regulation – the Key to a Lousy Economy
CEO Pay Still Bloated Despite Financial Reform
Complete Coverage of Financial Regulation