Senators: Are The Costs of Dodd-Frank Being Counted?
Banking Committee Republicans ask Inspectors General to review economic analysis
Washington, D.C. - With economic questions ranging from obtaining credit to job creation, Republican members of the Senate Banking Committee are seeking Inspectors General (IG) reviews of the economic analyses performed by the regulatory agency charged with implementing the Dodd-Frank Act. The Senators note the rules adopted under the Dodd-Frank Act will have a long-term effect on economic growth; they will affect how consumers and businesses obtain credit, allocate capital, and manage risk. The request for the IG review follows a similar letter in February raising the concern that the regulators are sacrificing quality and fairness in exchange for speed.
On April 15, 2011, the Office of the Inspector General for the Commodity Futures Trading Commission (CFTC) issued an investigative report entitled "An Investigation Regarding the Cost-Benefit Analyses Performed by the Commodity Futures Trading Commission in Connection with Rulemakings Undertaken Pursuant to the Dodd-Frank Act." The report found that:
- Legal formalities trumped economic analysis in the rulemaking process.
- CFTC staff considered economic analysis to be merely an administrative task, rather than a substantive part of rulemaking.
- CFTC's rulemaking process does not comply with the President's Executive Order "Improving Regulation and Regulatory Review".
- CFTC staff expressed "frustration" and "confusion" about the difference between cost-benefit analysis and the required Paperwork Reduction Act statement.
"Democrats paid little attention to the potential costs of Dodd-Frank before the fact. Regulators must now fully consider the costs after the fact. American jobs, economic growth, and the stability of our financial system are at stake," said Ranking Member Senator Richard Shelby (R-Alabama).
"During the debate on Dodd-Frank we were told that the regulatory agencies would look carefully at the overall interaction of regulations designed by the different regulators and assess the overall burden they present relative to the benefits they offer," Crapo said. "However, many of the proposed rules contain cursory, boilerplate cost-benefit analysis that does little to quantify the costs. The April Inspector General report raises a number of troubling issues with the cost benefit analysis being done by the CFTC and today we are requesting that the Inspectors General review the economic analyses performed by the Dodd-Frank regulators.
In addition to Shelby and Crapo, other members of the Senate Banking Committee signing the letter are Senators Bob Corker (R-Tennessee), Jim DeMint (R-South Carolina), David Vitter (R-Louisiana), Mike Johanns (R-Nebraska), Patrick Toomey (R-Pennsylvania), Mark Kirk (R-Illinois), Jerry Moran (R-Kansas), and Roger Wicker (R-Mississippi).