SEC Among Targets as House GOP Takes Aim at Executive Power

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By Rob Tricchinelli

House Republicans are targeting the SEC as part of a broader effort to exercise power over regulatory agencies, even though a top Republican says a broad financial overhaul won’t come in the first 100 days.

The House Rules Committee will consider a bill (H.R. 78) Jan. 10 that would ratchet up the cost-benefit analysis that the agency must perform when making rules, including a formal assessment that the “benefits of the intended regulation justify the costs.”

The House prepared to pass a more far-reaching bill Jan. 5 that would require Congress to approve all major regulations adopted by executive-branch agencies. Congress may void regulatory actions with a disapproval resolution that either gets signed by the president or enacted despite a veto, but this bill (H.R. 26) would require Congress to act for any major rules to take effect.

A broader overhaul of financial services regulations is not likely to occur in the early months of the Trump administration as it focuses on health care, tax and immigration, House Financial Services Chairman Jeb Hensarling (R-Texas) said on CNBC Jan. 5. Hensarling said action is likely by the end of the year.

Hensarling is the driving force behind the Financial Choice Act, a wide-ranging bill that will be a guidepost for House Republicans interested in revamping financial regulations. Hensarling introduced the bill in 2016 and is working on a revised version for this year.

Revisit Rules

H.R. 78, sponsored by Rep. Ann Wagner (R-Mo.), would apply a similar cost-benefit requirement to rules by the Public Company Accounting Oversight Board, Municipal Securities Rulemaking Board and Financial Industry Regulatory Authority.

The measure would also require the Securities and Exchange Commission to revisit all of its rules every five years to determine whether they are “outmoded, ineffective, insufficient, or excessively burdensome” and modify them accordingly.

Similar legislation was sponsored in previous congresses by former Rep. Scott Garrett (R-N.J.), who lost his reelection bid in November. A similar bill was approved by the Financial Services Committee in a June 2016 party-line vote.

After the Rules Committee approves the measure, the full House would be expected to pass it soon afterward.

Other Bills

The Rules Committee is going to take up other reintroduced legislation in the week of Jan. 9 that would affect startup capital-raising and reauthorize the Commodity Futures Trading Commission.

The startup bill (H.R. 79), sponsored by Rep. Steve Chabot (R-Ohio), would ease restrictions on how those companies may connect with angel investors at “demo days” or venture capital fairs. Startups rely on exemptions from securities laws to raise money with a lower registration burden.

The CFTC bill includes limitations on the agency’s ability to oversee some international derivatives activities.

To contact the reporter on this story: Rob Tricchinelli in Washington at rtricchinelli@bna.com

To contact the editors responsible for this story: Phyllis Diamond at pdiamond@bna.com; Seth Stern at sstern@bna.com

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