Editor’s Note: For more information about the long-recognized need for OIRA review of independent agency regulations, please see the 1987 National Journal article here.
From: Real Clear Markets
By Hester Peirce & Abby McCloskey
Hester Peirce is a senior research fellow at the Mercatus Center at George Mason University. Abby McCloskey is the program director of economic policy at the American Enterprise Institute.
Want more accountability of Wall Street? Start with their regulators. Financial regulators are rewriting the rules of finance with little to no consideration about how their actions will impact the economy. The result is unnecessary and potentially serious costs on consumers, investors, and economic growth.
The Dodd-Frank Act greatly expanded the power of financial regulators. It charged them with writing and enforcing 398 new rules, according to law firm Davis-Polk. While approximately half of the rules have not been finalized, regulators already have written roughly 13,000 pages of regulation, requiring over 60 million hours of paperwork by the American Action Forum’s count.
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But federal financial regulators – with few exceptions – answer to no one about potential economic downsides, nor are they required to consider alternatives with fewer undesirable consequences.
The lack of regulatory accountability stands in sharp contrast to what is required of most federal agencies. Since President Reagan, executive orders have required federal agencies-such as the Environmental Protection Agency or the Department of Health and Human Services-to consider the costs and benefits of the rules they promulgate. There are detailed standards for the analysis, and the Office of Information and Regulatory Affairs (OIRA)-part of the Office of Management and Budget-reviews rules at various stages during the rule-writing process. However, financial regulators are excluded from these orders because they are independent regulatory agencies.
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