On Wednesday, February 16th, the House Financial Services Committee approved the "SEC Regulatory Accountability Act" introduced by Rep. Scott Garrett (NJ-R). The legislation would impose additional requirements on the SEC's cost-benefit analyses of rules and orders, including mandating that the SEC Chief Economist participate in the cost-benefit analysis process and require that the SEC consider specified factors during its analysis.
The bill passed along party lines with 30 Republicans voting in favor of the legislation and 26 Democrats opposing it. Those that argue the bill is necessary point to a federal appeals court decision last year that overturned the SEC's proxy access rule because the agency failed to properly conduct a cost-benefit analysis. They also cite a report by the outgoing inspector general of the SEC that criticized how the agency analyzes the economic impact of some of its Dodd-Frank rules. Others, however, believe that the legislation will "cripple the ability of the SEC to carry out its regulatory functions, and make it difficult to protect investors even when the SEC has evidence of wrong-doing." They also state that increasing "operating costs for the agency without increasing its budget, thereby forcing it to divert funds from other actions such as enforcement."