Inter-Affiliate Swap Clarification Act

Mr. Chairman, I yield myself such time as I may consume.

I rise to strongly oppose H.R. 1062. This bill places significant additional requirements for economic analysis by the Securities and Exchange Commission, effectively bringing any efforts at rulemaking to a standstill.

Let's be clear: the purpose of this legislative effort is to stop implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act dead in its tracks. After losing in Congress, the fight against the Dodd-Frank act moved to the courts, beginning with overturning the proxy access rules they adopted under authority provided by that act.

Although I agreed fully with the SEC's position, they went with their friends to court and the court found that the SEC did not meet its already significant requirements to conduct an economic analysis.

After the proxy access case was overturned, the SEC adopted improved standards for conducting cost-benefit analyses. These procedures were cited by the GAO just last December as having all of the elements of good regulatory analysis. Basically, what the GAO is saying is we took a look, we studied it, and they do a good job.

Nonetheless, the bill before us today adds even more requirements, tying up the SEC resources, and putting it at even greater risk for litigation for every rule, despite the assurances of my Republican colleagues that they're only applying the terms of an executive order to the SEC. That executive order explicitly protects agencies from lawsuits based on their economic analysis. H.R. 1062 has no such protection for the SEC.

The Commission is undertaking a valiant effort to finish the Dodd- Frank and Jobs Acts rule, even in the face of attempts by the majority to restrict their funding. As the SEC attempts to balance capital formation with the need to protect investors, this bill weights the scales heavily in favor of industry over investors. In fact, the words ``investor protection'' do not appear anywhere in this bill.

Even without this bill, we can count on industry lobbyists to sue the SEC anytime it sees a weakness in the justification supporting a rule, as they have in several other cases currently before the courts.

And this bill does not apply only to new rules. This is extraordinary--and I want to say this so everybody understands--this bill would require the Commission to review every rulemaking ever issued--even those that have protected our securities markets since the Great Depression--1 year after the adoption of this bill, and then again every 5 years thereafter. As a result, the Commission will be forced to divert resources away from other key areas, such as enforcement.

This comes at a time when House Republicans want to hold SEC funding flat, despite the SEC's new responsibilities--the increase in the number of participants it oversees and the growth of complexity and the size of U.S. securities markets.

It is ironic that as House Republicans push this bill forward, they are also calling for the SEC to speed up its efforts on Jobs Act rules. This bill makes it impossible for the SEC to meet the very deadline we adopted just 2 days ago when we passed H.R. 701.

I urge my colleagues to oppose H.R. 1062, and I reserve the balance of my time.

At this time, I would yield 2 minutes to the gentlelady from New York (Mrs. Maloney).

I now yield 2 minutes to the gentlelady from Wisconsin, Representative Gwen Moore.

I yield 2 minutes to the gentleman from Minnesota, Representative Ellison.

Mr. Chairman, I yield 2 minutes to the gentleman from Connecticut, Representative Himes.

I yield 2 minutes to the gentleman from Delaware (Mr. Carney).

Mr. Chairman, I yield 3 minutes to the gentleman from Illinois, Representative Foster.

I yield 3 minutes to the gentleman from Georgia (Mr. David Scott).

Mr. Chairman, I yield 2 minutes to the gentleman from Washington, Representative Denny Heck.

Mr. Chairman, I yield myself such time as I may consume.

First, I have a number of communications that I will insert into the Record.

I have a Statement of Administration Policy from the Executive Office of the President; I have American Federation of Labor and Congress of Industrial Organizations; I have Americans for Financial Reform; I have AFSCME; and I also have California Public Employees Retirement System, all in opposition to this bill, and asking us to please oppose the bill.

Executive Office of the President, Office of Management

and Budget,

Washington, DC, May 15, 2013.

Statement of Administration Policy

H.R. 1062--SEC Regulatory Accountability Act

(Rep. Garrett, R-NJ, and 23 cosponsors)

The Securities and Exchange Commission (SEC) plays a

critical role in protecting Americans' investments for

retirement, higher education, and other personal savings

while ensuring strong, efficient, safe financial activity

that contributes to the Nation's economic health and job

creation. While the Administration is firmly committed to

smart and effective regulations that advance statutory goals

in the most cost-effective and efficient manner, the

Administration opposes passage of H.R. 1062. By adding

burdensome and disruptive new procedures, H.R. 1062 would

impede the ability of the SEC to protect investors, maintain

orderly and efficient markets, and facilitate capital

formation.

The Administration believes in the value of cost-benefit

analysis. However, H.R. 1062 would add onerous procedures

that would threaten the implementation of key reforms related

to financial stability and investor protection. H.R. 1062

would direct the SEC to conduct time- and resource-intensive

assessments after it adopts or amends major regulations

before the impacts of the regulations may have occurred or be

known. The bill would add analytical requirements that could

result in unnecessary delays in the rulemaking process,

thereby undermining the ability of the SEC to effectively

execute its statutory mandates.

The Administration is committed to a regulatory system that

is informed by science, cost-justified, and consistent with

economic growth. Through efforts including Executive Order

13579, ``Regulation and Independent Regulatory Agencies,''

the Administration is taking important steps to encourage

independent agencies to follow cost-saving and burden-

reducing principles in their reviews of new regulations, and

to examine their existing rules to identify those that should

be modified, streamlined, or repealed.

Mr. Chair, how many minutes do I have left?

I yield myself the balance of the time.

In closing, allow me to quote one of the Financial Services Committee members in a hearing yesterday, because I think it is so important for us to understand that the SEC is our cop on the block that has the responsibility for protecting investors.

Let us understand that my colleagues on the opposite side of the aisle are opposed to the SEC having an adequate budget. They do everything that they can to cut the budget, to deny the resources; but they keep adding on additional responsibilities, recognizing that the SEC has a tremendous load. Not only do they have all of the work, the cost-benefit analysis that they do on everything, but they have the responsibility of rulemaking for all of Dodd-Frank, which is the reform legislation that will cause us to eliminate risk and to protect our constituents and the citizens of this country.

But let me just say that yesterday, during a Financial Services Committee hearing, Chairman Emeritus Spencer Bachus said that it would be penny-wise and pound foolish for there not to be a bipartisan agreement for raising the funding or increasing the funding for the

Mr. Chairman, I claim time in opposition to the amendment, although I do not oppose the amendment.

Mr. Chairman, I yield myself such time as I may consume.

This amendment adds a requirement that the SEC analyze the number of jobs created or lost as a result of a new rule or order, while differentiating between public and private sector jobs.

Although this amendment is not by itself problematic, it layers one more requirement onto a bill already bursting with onerous cost-benefit requirements. And while counting the jobs created or lost because of a particular regulation is a noble goal, we have to view this goal in the context of the overall bill, which tips the scales heavily in favor of industry over investors, including the pension plans for millions of Americans.

The criteria by which the SEC would need to engage in cost-benefit analysis under H.R. 1062 would have the Commission make all decisions on the basis of whether the rules impose the least burden on ``market participants.'' In fact, nowhere in the bill are the words ``investor protection'' used, despite the fact that a central mission of the Securities and Exchange Commission is to protect investors.

Let's be clear: H.R. 1062 is essentially a solution in search of a problem. This bill is not about refining the SEC's cost-benefit analysis. The Commission, in fact, has already done that by adopting a new set of guidelines to ensure that its analysis meets the very high bar set in the decision overturning their proxy access rule. Instead, this bill is about making it easier for industry groups to overturn SEC regulations in the courts.

After the 2008 financial crisis, the public spoke; and they demanded that Congress stand up and legislate rules of the road to prevent another crisis. So we took action to regulate the over-the-counter derivatives market, improve corporate governance, implement the Volcker rule to stop commercial banks from gambling with depositor money, and to reform the credit ratings agencies that slapped AAA ratings onto toxic securities.

Having lost that battle here in Congress, the industry--with the help of some of my colleagues on the other side of the aisle--is now waging a new, quiet battle to have these regulations thrown out in court. H.R. 1062 abets that goal by making it significantly easier for the industry to win in court. This is a key differentiation from the President's executive order on cost-benefit analysis, whose requirements cannot be used as a basis for litigation.

So, again, this amendment is harmless, but it amends what is a deeply problematic bill.

I yield back the balance of my time.

Mr. Chairman, I claim time in opposition to the amendment.

I yield myself such time as I may consume.

Mr. Chairman, this amendment doubles down on all of the problems raised by H.R. 1062 by imposing the same burdensome cost-benefit analysis requirements on the Municipal Securities Rulemaking Board, or MSRB, and certain self-regulatory organizations as the underlying bill imposes on the SEC.

Beyond the problems caused by H.R. 1062, this amendment would further put individual citizens and taxpayers at risk by tying the hands of the MSRB, which is entrusted with regulating dealers of municipal securities, including city bond issuances.

The Wall Street Reform Act expanded the mission of the board to protect State and local governments and to regulate, for the first time in history, the individuals who provide municipalities with financial advice.

We had good reason to expand the mission and responsibilities of the MSRB under Dodd-Frank. Like many borrowers who were sold exotic mortgages based on the representations made by mortgage brokers in the lead-up to the financial crisis, we saw that many municipalities entered into complex financial instruments that they didn't fully understand. At the same time, we saw that many financial advisers to municipalities were involved in pay-to-play scandals and recommended unsuitable investments, particularly to small communities. The result was the imposition of substantial costs on taxpayers in communities across the country. The most high-profile example is the case of Jefferson County, Alabama, which entered into the largest municipal bankruptcy in history after a simple sewer bond financing deal ended with the county going broke over faulty interest rate derivatives.

This amendment will make it much more difficult for the MSRB to regulate the financial entities selling these derivative products to our small counties, cities, and towns.

But that's just one example. The amendment would impose similar onerous requirements on the Financial Industry Regulatory Authority-- that is FINRA--the self-regulatory organization for broker-dealers, and the Public Companies Accounting Oversight Board, which regulates the auditing industry.

Again, this amendment doubles down on what is already a harmful bill by extending the same onerous requirements of self-regulatory organizations. I see no reason why the Congress would want to further tip the scales in favor of Wall Street over Main Street.

I reserve the balance of my time.

I yield the balance of my time to the gentleman from Georgia (Mr. David Scott).

Mr. Chairman, I demand a recorded vote.

Thank you very much.

Mr. Chairman and Members, I would like to thank the gentlelady from New York for bringing this amendment today. As a matter of fact, the opposite side should thank her, too, because she is giving them an opportunity to back out of this awful bill that will be harmful and that is ill-informed and to get

on with just saying that her resolution would make good sense. So I am eager to support this amendment from the gentlelady from New York.

The amendment strikes all bill text and replaces it with a sense of Congress, reiterating all the economic analysis requirements already imposed on the SEC.

Specifically, current law requires the SEC to conduct economic analyses pursuant to the Paperwork Reduction Act, the Congressional Review Act and the Regulatory Flexibility Act, as well as additional cost-benefit analysis per the National Securities Markets Improvement Act.

Mr. Speaker, I have a motion to recommit at the desk.

In its current form, I am.

This is the final amendment to the bill, which would not kill the bill or send it back to committee. If adopted, the bill will immediately proceed to final passage, as amended.

This motion ensures the ability of the SEC to continue to protect investors and enforce the securities laws. I want to emphasize that this motion does not stop the bill, but it does flag the very important ways in which we need to let the SEC act. The motion would ensure that the SEC can protect investors and enforce the securities laws in two specific areas:

First, the motion will ensure that this bill does not reduce the ability of the SEC to protect the pension plans of our firefighters and police, the people on whom we rely as our first responders, as well as the pension plans of teachers and other retirees against fraudulent and deceptive practices. Protecting investors is a core element of the SEC's mission and one that we ignore at our peril. This week is Police Officers Week. Do we really want to honor our men and women in service by stripping them of protections for their hard-earned and hard-won earnings? Mr. Speaker, these protections become ever more crucial as we rely increasingly on the securities markets for our retirement savings.

Second, the motion to recommit focuses on protecting investors by ensuring that the SEC can protect against the takeover of American firms by foreign companies, particularly Chinese companies, that are using such mergers to access the investor funds in our capital markets without going through the SEC registration process. The SEC has had numerous enforcement actions against such companies which purchase a small company and merge it with a larger, often fraudulent, foreign company. It has worked hard to protect the savings of hardworking Americans, including union pension holders and other pensioners, from being disadvantaged by these Chinese firms that don't play by the same rules.

Both of these areas highlight the importance of SEC action to protect investors, particularly those preparing for retirement. With Americans increasingly dependent on the securities markets to protect their retirement savings, it is more critical than ever to ensure that we preserve the ability of the SEC to act.

Just yesterday, we heard from the SEC's new chairwoman, Mary Jo White. When we asked her about this bill, she said that she found it ``very troubling.'' I don't imagine that a former prosecutor who took on the Mob and terrorists is easily troubled. Indeed, she said that she had already needed at least 45 new economists to meet the need for an expanded economic analysis under the SEC standards, but she couldn't hire them due to the sequester. This is troubling indeed.

Rather than helping the SEC to do its job better, we are cutting its budget and throwing up new roadblocks, like this bill. It is a mistake. I urge my colleagues to support this motion, and I yield back the balance of my time.

Mr. Speaker, I demand a recorded vote.

Mr. Speaker, I ask unanimous consent that all Members have 5 legislative days within which to revise and extend their remarks and submit extraneous material for the record on H.R. 1062, the SEC Regulatory Accountability Act of 2013.

Mr. Chairman, I yield myself such time as I may consume.

Mr. Chairman, I rise today to urge the adoption of H.R. 1062. This is a bill that technically is about something called cost-benefit analysis. I know to some that sounds a little bit like Ph.D. economics, but, Mr. Chairman, what it's really about is kitchen-table economics.

When I go home to the Fifth District of Texas, what I hear from my constituents is that they're insecure in their jobs--those who are lucky enough to have them.

We know that millions of our fellow citizens are unemployed, are underemployed; and those who are fortunate enough to have jobs wonder will they have them tomorrow.

We know again that we are in the Great Recession, the ``non- recovery'' recovery. So the impact of the regulations that are promulgated in Washington, D.C. has a huge impact on kitchen-table economics, on whether or not our constituents are going to be able to put gas in the car to take their children to school, whether or not they're going to be able to help an elderly parent with their medical bills, how they're going to put groceries on the table.

It is incumbent upon us, Mr. Chairman, to make sure that the rulemaking authority--that this body helps grant the executive branch-- at least has to take into account how their rulemaking impacts hardworking American citizens and those who wish to work hard.

So this is a very, very simple bill, Mr. Chairman. It simply says that the Securities and Exchange Commission has to adopt cost-benefit analysis to ensure that the advertised benefits of one of their rules is actually measured against the actual cost of what they're doing. This is vitally important.

Mr. Chairman, as you well know, this body had a vote yesterday to repeal the Affordable Care Act--or dare I say the Not So Affordable Care Act. And I'm curious, what would have happened had Congress had the benefit of the cost of this bill prior to that vote? What would have happened had we known that the Congressional Budget Office said that we will have 800,000--almost 1 million--fewer jobs because of ObamaCare?

You know, when we took that vote, Mr. Chairman, all we had were the advertised benefits. But how come we didn't have the Congressional Budget Office report of the cost? That's just one example. Almost 1 million fewer jobs because nobody bothered to conduct cost-benefit analysis. It wasn't required at the time.

Now the President claims that we ought to have this. He issued an executive order--No. 13563--saying government agencies ought to do it, but then his administration issues a veto threat on this bill. I find that kind of interesting. So the President says he wants to do it; he's just not actually going to do it.

The SEC mission, among other things, is to ensure that we help form capital. You cannot have the benefits of capitalism and the free enterprise system without capital, capital formation. So it's necessary to ensure that we look at the cost of what we're doing.

Apparently, the SEC historically--again, notwithstanding that they claim they're going to do it. Most recently, we've had a unanimous decision of the D.C. Circuit Court of Appeals--unanimous decision--in the proxy access case that the SEC failed--and failed miserably--at ensuring cost-benefit analysis, also known as kitchen-table economics. How are the costs of their rulemaking going to impact hardworking Americans?

It's time to remedy this, Mr. Chairman. Our constituents demand it.

Again, I urge the adoption of H.R. 1062, and I reserve the balance of my time.

I yield myself 30 seconds, Mr. Chairman, just to say that, number one, in listening to my colleague, the ranking member, I'm just curious about this concern about litigation burdens. We certainly didn't see it, as she and many of her colleagues back the proxy access rule, and how many have refused to support medical liability reform. So I don't understand why the litigation burden concern is not there.

In addition, I notice that the SEC has sought comment in the past on rulemaking to ensure that there is a retrospective look-back because markets change.

At this time, Mr. Chairman, I would like to yield 5 minutes to the chairman of the Subcommittee on Capital Markets and GSEs of the Financial Services Committee, the author of the legislation, the gentleman from New Jersey (Mr. Garrett).

Mr. Chairman, I yield myself 10 seconds just to say to my friend from New York that if this regime is so effective, why was there a unanimous decision in the D.C. Circuit Court of Appeals to say it was ineffective, and if it is already on the books then the worst thing that we have done is that we are being repetitive. I don't think that's such a great sin.

I now yield 2 minutes to the gentleman from Virginia, the vice chairman of the Capital Markets Subcommittee, Mr. Hurt.

Mr. Chairman, at this time, I yield 1\1/2\ minutes to the gentleman from Frog Jump, Tennessee (Mr. Fincher).

Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from North Carolina (Mr. Pittenger).

Mr. Chairman, at this time, I yield 1 minute to the chairman of the Financial Services and General Government Appropriations Subcommittee, the gentleman from Florida (Mr. Crenshaw).

I yield the gentleman an additional 30 seconds.

Mr. Chairman, I yield 2 minutes to myself.

I would like to do a little factual cleanup here, Mr. Chairman, on some things that my Democratic colleagues have said.

I believe I understood my friend, the gentlelady from Wisconsin, to say nowhere in this bill is the word ``benefits.'' First, I would say, number one, it is a 10-page bill, not a 2,000-page bill. And on the very first page, line 11, you read the word ``benefits.'' If you turn to page 2--not page 2,000--page 2, line 3: ``Utilize the Chief Economist to assess the cost and benefits.'' So let me correct that for the record.

Second of all, we had discussion about the failure of regulation and how this bill might lead to another Great Recession or financial crisis. I would point out to my friends that it was the failure to understand the cost of Fannie and Freddie, the failure to understand the cost of the affordable housing goals that put millions of our fellow citizens into homes that they could not afford to keep.

So maybe, just maybe, had this body and the other body realized the full cost of their folly and how it could not only bring this economy to its knees, that it could cause our fellow citizens to risk their meager lifesavings on homes they couldn't afford to keep, maybe had a cost-benefit analysis been in place at that time, we wouldn't have the suffering that we have today.

I would say to my friend from Connecticut, he is clearly talking to different economists and different job creators than I have because what I understand from them is that, frankly, we have trillions of dollars of capital sitting on the sidelines because of Dodd-Frank, because we have rulemaking that falls into two categories: those that create uncertainty and those that create certain harm.

Last, but not least, I actually have the numbers from CBO on the budget of the SEC. And I think if you examine them carefully, Mr. Chairman, you will discover that in a little over 10 years, this is an agency whose budget has increased 300 percent.

I reserve the balance of my time.

Mr. Chairman, I now proudly yield 1 minute to the distinguished majority leader, the gentleman from Virginia (Mr. Cantor).

Mr. Chairman, I yield myself 30 seconds to say to my friend from Georgia when he talks about the incredible burden of a retrospective look back, I would quote:

Because considerations of efficiency and competition in

capital formation evolve over time, a retrospective analysis

of the Commission's rules and regulations is fully within the

Commission's statutory mandate.

That comes from the ABA.

I would also quote this as well:

The safety of workers' retirement savings that are invested

in the capital markets depend in large part on the

Commission's rules and regulations for the protection of the

investors. To be effective, securities regulations must be

continuously updated to address the emergence of new

loopholes, abuses, and market failures.

Mr. Chairman, I would like to yield 1 minute to the author of the bill, the gentleman from New Jersey (Mr. Garrett).

Mr. Chairman, I'm under the impression I have the right to close, so the gentlelady has reserved. I will reserve until she is ready to close.

Mr. Chairman, how much time do I have remaining?

Mr. Chairman, I yield myself the balance of the time, although I will alert my colleagues I do not intend to take it all.

Mr. Chairman, I find it somewhat interesting the great amount of wailing and gnashing of teeth that we have heard on this House floor for a very simple bill that weighs in at, frankly, less than 10 pages that simply requires a government agency to decide is there going to be a cost to our economy, is there going to be a loss of jobs as they pass a rule. It doesn't overturn their rules. It just says, before you make a rule, you've really got to think about kitchen-table economics. You've got to take a look at and understand how will this ultimately impact hardworking Americans who are struggling to pay their health care bills, struggling to put gas in the tank and who have economic insecurity due to this economy.

So I've heard a lot of furor here. I must admit I'm particularly entertained by those who care to lecture me on what it means to be a conservative. Maybe I'm not the world's expert, but there was a time in my career my fellow colleagues elected me the chairman of the Conservative Caucus of the House, known as the Republican Study Committee. And, Mr. Chairman, I have a certificate in my office that I proudly display from the Americans for Democratic Action where they say Congressman Hensarling receives a zero percent liberal rating.

So I will certainly agree with my friends that, apparently, I don't know much about liberalism, but I do think I do know a few things about conservatism. So I'll come up with an informal agreement. We'll let you be the experts on what it means to be a liberal--and you're very good at it, to the best of my knowledge--and I will retain the expertise on how one votes conservative.

The next thing I would say, Mr. Chairman, is how fascinating it is to have so many of my colleagues say that this bill, on the one hand, is unnecessary, but, on the other hand, it's burdensome; on the one hand, it's redundant, but, on the other hand, it will stop the SEC in its tracks. Mr. Chairman, I just don't think you can quite have it both ways.

I notice when some can't argue the merits of a question, they tend to come up to question one's motivation, and we've got the usual Wall Street bogeymen to come in here. But what I want to know about is why, why would we not want to know, as some have estimated, that the Volcker rule promulgated by the SEC potentially could cost 1.1 million jobs in our Nation? And yet my colleagues from the other side of the aisle say, Shh, no, no, no, no, no. We don't want this information. We don't want it out. Just like we didn't want out the information that ObamaCare could cost us 1 million jobs.

And we see it every day. We get the headlines: people can't afford their health care, their premiums have gone up; people are getting laid off; people who had full-time jobs are going to part-time; and people who would have hired more people don't want to cross that 50-person threshold. And that's just ObamaCare. But, no, shh, we don't want--we don't want to know how this is going to impact hardworking Americans who have economic insecurity, millions who do not have jobs.

I am somewhat perplexed, Mr. Chairman, how such a simple bill that says all you've got to do is look at the cost--we're not imposing our numbers on them. We're just saying you've got to look at the cost of what you do. It's what families do; it is what job creators do; and, frankly, it's what the administration claimed they wanted to do, and it's what the SEC claimed they wanted to do.

How many of my Democratic colleagues with their words say ``yes'' but very soon with their voting card are going to say ``no''? No, we shouldn't know the cost of rulemaking. No, we just want to know what bureaucrats say the benefits are. But, you know, if people lose their jobs, well, que sera, sera. We just aren't going to--we don't want to know that ahead of time. Maybe we'll learn about it afterwards. Maybe we'll try to clean up the pieces, the shattered lives of people who lost their jobs.

Mr. Chairman, this is a false dichotomy set up by many of my colleagues on the other side of the aisle. The question is not between regulation and deregulation. The question is between smart regulation and dumb regulation. And smart regulation requires the rule makers to understand the cost of their rules to the average, hardworking American family. That's smart regulation. Dumb regulation is burying your head in the sand and saying, no, we don't want to know.

If we're so concerned about the burden on the SEC, if we're so concerned about the litigation burden, and if we're so concerned about the work burden and the rule burden, where's this same concern for the job creators of America? Where is that concern? You cannot help the job seeker by punishing the job creator, which is what so many of the different titles of Dodd-Frank do.

So at the end of the day, Mr. Chairman, this is as simple and as common sense as it could be. If you're going to pass a rule and you're going to tell us about the benefits, you've got to let us know what the costs are to the economy and to hardworking American families. It's common sense. We should adopt it. We should adopt it today.

I yield back the balance of my time.

I thank the gentleman.

I rise today obviously in support of H.R. 1062, the SEC Regulatory Accountability Act.

At a time when new regulation after new regulation is being proposed by

this administration, it is critical that we restore some semblance of order to the regulatory process and ensure that our Nation's small businesses do not continue to drown in a sea of red tape. So this legislation specifically subjects the SEC to a more robust version of the President's own order, which requires and outlines an enhanced cost-benefit analysis requirement, as well as requires a review of existing regulations.

The SEC Regulatory Accountability Act will do what? It will enhance the SEC's existing economic analysis requirements for requiring the Commission to first identify the nature of the problem that would be addressed before issuing any new regulations.

While the SEC has already certain cost-benefit related requirements in current law relative to rulemaking, as indicated before, recent court decisions have vacated or remanded several of these and pointed out the deficiencies in the Commission's use of cost-benefit analysis.

For example, recently the SEC inspector general issued a report that expressed several concerns about the quality of their analysis. They found that none of the rulemaking examined attempted to quantify either benefits or costs, other than informational collection cost.

This bill will ensure that the benefits of any rulemaking outweigh the cost, and that both new and existing regulations are accessible, consistent, written in plain language, and easy to understand.

The legislation will also require the SEC to assess the cost and benefits of available regulatory alternatives, including the alternative of not regulating at all, and to choose the approach that basically gives us the best benefits.

Under the bill, the SEC shall evaluate whether a proposed regulation is inconsistent, incompatible, or duplicative of other Federal regulations, as well.

So because some rulemaking has been politicized in the past, the bill then requires this cost-benefit analysis which I talk about will be performed by who? By the Commission's chief economist.

These are commonsense reforms. They are appropriate, especially given the fact that the Commission continues to struggle with this issue. For instance, as already pointed out in the recent unanimous decision of the D.C. Circuit Court of Appeals, which vacated the Commission's proxy access rule, the Court stated:

The Commission acted arbitrarily and capriciously for

having failed once again adequately to assess the economic

benefits of a new rule and inconsistently and

opportunistically framed the costs and benefits of the rule.

The bill also includes, besides all this, a section that will provide a clearer post-implementation assessment of new regulations so that post-implementation cost-benefit analysis can also be done, in addition to the pre-implementation. This will be able to better inform the true impact of the major rules once they're in place.

Now, some of my colleagues on the other side of the aisle say these new requirements will be too costly and will open the SEC to a flood of additional lawsuits. No, no, no, no. This could be further from the truth. By having these robust standards, the rules will be drafted so well that they will be thoroughly done, they will not be struck down by the courts, and we will not have to wade through additional time and money defending them in court and then redrafting the rules, like the proxy access rule.

So in the end, this is a commonsense, pragmatic approach to our rulemaking process that should have been in place all along. And with our economy struggling now with unemployment above 7\1/2\ percent, we need to ensure that we're making it easier, not harder, for businesses to begin hiring again.

Clearly, Mr. Chairman, a stronger commitment to economic analysis by the SEC is absolutely essential to ensure reasonable rules do not unduly burden registered companies or negatively impact job creation.

I was not going to speak again until, in fact, I was being lectured on what a true conservative is by the other side of the aisle, who gave us the over 2,000-page Dodd-Frank legislation that has in fact stymied the economy, despite what the gentleman from Connecticut was saying before, that is setting literally trillions of dollars on the side, not being invested; that the unemployment rate hovers at high levels because of this stagnation in the economy because of the legislation.

To the other side of the aisle, to define what a true conservative is, a true conservative would actually read the bill, as other Members of the other side of the aisle have not done. Those who could not find simple words such as ``benefit'' when it is listed many times, those who could not find the benefits to investors when it's listed multiple times. A true conservative would understand what they're talking about when they come to the floor, Mr. Chairman. A true conservative would do what's in the best interest of the economy, of the investor, of the job seekers of this country, as well. A true conservative would support this legislation.

Mr. Chairman, I rise in opposition to the amendment.

Mr. Chairman, first of all, I appreciate the gentlelady's offer of an amendment here. I also appreciate the fact that the lady and I have often worked together on legislation in the past in our respective committee, but on this one I humbly disagree.

As she says, the amendment before us basically guts the bill and simply sets forth a sense of Congress.

Two points, one on policy and one on practicality.

On policy, if this were the gentlelady's idea that this is the way we should go on this piece of underlying legislation, as the ranking member of the subcommittee and as a member of the full committee, she had every opportunity in the world to come before the committee at the time and put this before us, at which time we could have had a full and complete debate on it.

Had we done so, we probably would have pointed out to her two things.

One, she makes reference to the D.C. Circuit Court's opinion on lines 14 through 18 of her case. Would that the D.C. Circuit Court had said that the SEC is doing a good job, that they had the authority to do so and that nothing else is necessary in going forward. If she had read the opinion, she would have known that that's not quite what they said.

The D.C. Circuit Court stated that the SEC, the Commission, acted arbitrarily and capriciously for having failed--note this--``once again''--so this is not the only time--but once again to adequately assess the economic effects of the new rule and, again, inconsistently and opportunistically framed cost benefits of the rule.

So the citation that she gives of the D.C. Circuit Court does not support her position but undermines her position. The D.C. Circuit basically supports our position that the SEC has failed, and that it has failed repeatedly to do what it should do, and that is why we have the legislation before you today.

And when she talks about red tape and unnecessary--well, that's not what the AFL-CIO says, and that's not what the American Bar Association says. The SEC did look at the issue of doing a retrospective look at this. They did so back over a year and a half ago, back in September of 2011, and they asked for input.

What did the AFL-CIO say about that?

To be effective, security regulations must be continuously

updated to address the emergence of new loopholes, abuses and

market failures.

Likewise, the American Bar Association also chimed in about the retrospective analysis, which is what the SEC could have been doing, should have been doing, didn't do, and that is what our bill will require them to do.

So I appreciate the gentlelady's efforts in this area, but I would recommend a ``no'' vote on her amendment.

I reserve the balance of my time.

I yield back the balance of my time.

Mr. Chair, I demand a recorded vote.

Mr. Speaker, I rise in opposition.

Mr. Speaker, I will be brief, and I will simply address both the process and the policy briefly.

On the process, I appreciate the gentlelady's bringing this amendment here to the floor today; but, as she knows, we were in committee for multiple hours hearing various amendments on the underlying legislation, and she had every opportunity to bring it before the entire committee at that time, and we could have had a full and complete debate and actual vote in the committee at that time. I am lost for a reason why she did not go through the regular order.

But, more specifically, to the merits of the underlying bill and the amendment, if there could be anything simpler or easier than what we are trying to do in the underlying bill, H.R. 1062, Mr. Speaker, let's be real. Mr. Speaker, all we're asking the SEC to do is this: identify a problem first before you do a regulation, and then once you consider a regulation, consider all the alternatives that are out there, not just the initial one that comes forward. And then once you've passed that regulation, the next year and years after that, go back and reconsider them and make sure that they're being done effectively and they were the most efficient regulations for the economy. That's the underlying legislation, and that's why I encourage my Members to support the underlying bill.

To the MTR, what is the SEC charged to do? Three, basically, core provisions: investor protection, capital formation, and efficient markets. And perhaps to the point here, one of the most important is investor protection.

Who are we talking about when we're talking about investors? It's that single mom out there who is trying to raise a young girl and trying to put her into college and have money to do so. It's the young couple who wants to have financing to be able to buy their first home. It's the moms, dads, and our grandparents, the pensioners and the retirees who want to know that their investments are secure and the markets are operating efficiently. To the point here with your amendment most specifically, yes, it's the cop on the beat, it's the fireman, and it's the union worker who wants to make sure that he's investing his time and efforts into our community and his investments are taken care of in an efficient operation in the markets on Wall Street and the markets as well.

That's what our bill does. All of them are taken care of in the underlying legislation. Your amendment basically says that we don't care as far as making sure the most efficient rules are concerned when it comes to the firefighters, the pensioners, or the teachers.

I'll close on this. If we want to honor the firefighters, if we want to honor the police officers, and if we want to honor the teachers and the pension funds, vote ``no'' on this MTR and vote ``yes'' on the final passage.

I yield back the balance of my time.

Mr. Chair, I rise today in opposition to this bill, H.R. 1062, the so-called SEC Regulatory Accountability Act.

This bill provides an extremely detailed list of factors that the Securities and Exchange Commission (SEC) will have to consider from now on in its rulemakings: every available alternative to a proposed regulation, market liquidity in the securities markets, and even whether the regulation ``is tailored to impose the least burden on society, including market

participants, individuals, businesses of differing sizes, and other entities (including State and local governmental entities).''

Yet, I notice that one phrase is missing from this list: investor protection.

Back in 1937, then SEC Chairman, and later Supreme Court Justice, William O. Douglas noted that:

We have got brokers' advocates; we have got Exchange

advocates; we have got investment banker advocates; and WE

are the investor's advocate.

That historically always has been the role of the SEC--to serve as the investor's advocate in our nation's securities markets. That is why Congress established the SEC, and why Congress has expanded its duties and responsibilities over the years. The goal of investor protection was similarly an animating force behind Democrats' efforts in the 111th Congress to enact the Dodd-Frank Wall Street Reform Act. Any bill that asks the SEC to look at myriad factors when developing regulations but not investor protection is off-course from the starting block. It's a bill whose compass is broken.

Yet, this is not just a bad bill. It's an unnecessary bill. Back in 1996, during the first Congress under Republican control in forty years, Democrats and Republicans came together to enact the National Securities Markets Improvement Act of 1996. This bill was authored by a conservative Republican from Texas (Rep. Fields), and supported by the then Chairman of the Committee (Mr. Bliley of Virginia). It was also supported by the Ranking Democrat of the Committee (Mr. Dingell) and myself. As I said at the time, ``when the history of this Congress is written, there is no question that this securities overhaul and the telecommunications overhaul will be at the top of the list in terms of constructive, productive use of this Congress.'' Among the reforms in this bipartisan bill was a requirement that: ``Whenever pursuant to this title the Commission is engaged in rulemaking, or in the review of a rule of a self-regulatory organization, and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.''

The 1996 Act, which is current law, therefore makes sure that the SEC already is required to consider impacts on efficiency, competition and capital formation whenever it utilizes its inherent rulemaking powers to determine if an action is in the public interest.

But part of the deal that we reached back then on a bipartisan basis was that such an analysis could not be utilized to override the primary goal of the federal securities laws: investor protection. I see no reason why this House should throw out a good, bipartisan law for a clearly inferior update.

Yet, it is worth asking: given the requirements of existing law, exactly what purpose does this bill before us today actually serve?

I believe that this question has only one answer: to tie the SEC's hands and make it effectively impossible to release rules that help protect investors from depredations of rogue traders or dishonest Wall Street brokers. When Democrats in Congress enacted Dodd-Frank in 2010, we frequently included in that Act mandates that the SEC and other agencies issue various specific rules to regulate Wall Street. In many cases, Congress effectively gave the SEC a full, detailed directive for regulatory action and simply ordered the SEC to implement it. An example of this process can be found in Dodd-Frank Section 1504, which mandated in great detail how the SEC should promulgate a rule to require that companies disclose in their annual securities filings any payments they made to governments in connection with natural resource extraction projects. Notably, in many of those Dodd-Frank rules, Congress did not ask the SEC to consider the costs and benefits of a rule, because we in Congress already did so during the legislative process.

This bill makes that kind of legislating impossible. If this bill becomes law, any rulemaking mandated by Congress must receive cost benefit analysis, and if the costs are deemed by the SEC to outweigh the benefits, the rulemaking cannot be released.

And such outcomes--which should really be called agency vetoes, because they allow an agency to override a congressional mandate--are likely to happen because of the unfair playing field this bill sets up. Under this bill, the SEC will always have to consider the monetary costs to firms and liquidity, but the more amorphous dangers of not regulating--the risk of market crashes, the risk of bubbles, the risk of financial crises--are much harder to estimate. And even if the SEC does manage to get a good rule, by ordering the SEC to create an established record of why the options not taken might also be worthwhile, this bill forces the SEC to create a blueprint for Wall Street firms to fight the regulation in court. This bill will make what is already a difficult fight to protect Main Street from Wall Street even harder.

One thing is certain--this bill strongly biases the SEC against any regulation to protect investors regardless of the issue, and at a time where the American People are crying out for more regulations on Wall Street, not less. We need to ensure that the SEC continues to be the ``Investors'' Advocate.'' I therefore strongly urge my colleagues to vote no on this bill.

Mr. Chairman, I thank the lady for yielding and for her leadership.

I strongly oppose this bill because I believe it would in effect cripple the SEC just as it undertakes the immense task of implementing the essential Dodd-Frank reforms. May I remind my colleagues that this country lost $12 trillion, according to some estimates, and it happened in part because regulators, like the SEC, were ill-equipped, underfunded, and did too little, too slowly.

The Republican bill comes in the guise of requiring the SEC to undertake a cost-benefit analysis of regulations. But it is really a prescription for paralysis of the SEC's ability to protect our investors and our markets.

There is already a multilayered and highly effective cost-benefit analysis built into the SEC rulemaking process. Just look at the recent D.C. Circuit case where the court overturned an SEC proxy access rule and sent a message back to the SEC reminding them of all the cost- benefit analysis that they are required to do now by law. They stated they will vacate any rule if this is not done.

Already there is analysis required under the Paperwork Reduction Act, the Congressional Review Act, and the Regulatory Flexibility Act. And just for the SEC alone, in 1996, we passed the National Securities Market Improvement Act requiring a cost-benefit analysis.

It is already there, it is on the books, and it is enforced by our courts. So what is before us today? A hurdle. Let's do more. Let's require them to go back to 1933, review every rule, so they cannot do their important work of protecting the American taxpayer and our economy of derivatives fraud, other fraud, and other abuses to investors.

I'm just warming up. I think my colleagues have a lot to say. It is a prescription for paralysis. I urge a ``no'' vote for investor protection.

Mr. Chairman, I have an amendment at the desk.

I thank the Chair, and I yield myself as much time as I may consume.

First, I would like to say that I am happy to work with Mr. Garrett on a variety of issues. I respect his leadership. But I must respectfully and strongly disagree with him on this issue before us today.

It seems clear that the intended effect of the Republican bill is to cripple the SEC just as they undertake the very tough and important job of implementing the badly needed reforms we passed in Dodd-Frank.

May I remind my colleagues that we passed Dodd-Frank in response to the worst financial crisis in our lifetime, one in which we were at one point losing 700,000 jobs a month, and by some estimates the loss was well over $12 trillion.

My amendment strikes the underlying bill and puts a sense of Congress in its place.

My amendment contains findings that very clearly lay out the cost- benefit analysis process that the SEC already has to go through in proposing or adopting a rule.

What this bill would do now, the Republican bill, is handcuff the SEC commissioners with unnecessary redtape so that the Commission will be unable to protect investors effectively.

Despite what the other side of the aisle is saying, there is already a multi-layered and effective cost-benefit analysis built into the SEC rulemaking process.

The SEC is already required by law to do cost-benefit analysis under the Paperwork Reduction Act and the Congressional Review Act and the Regulatory Flexibility Act, and for the SEC specifically under the National Securities Markets Improvement Act of 1996.

In fact, just last year, the GAO issued a report praising the SEC's guidance on cost-benefit analysis saying:

The basic elements of good regulatory economic analysis.

And in evaluating a recent proposal on swaps regulation, the cochairman of the Financial Services Department at Cadawalder wrote:

The SEC release contains the most detailed attempt at an

economic analysis of the effect of the rules that I have seen

from any agency.

But under this Republican bill, the SEC would have to divert its limited budget resources away from enforcement or examining the impact of worldwide derivatives markets only to duplicate things it is already doing.

This bill also says that every 5 years the SEC is required to do a cost-benefit analysis of every regulation it has ever issued on any subject going back some 80 years, back to day one in 1933. And it would have to magically do all of this without one additional red cent of additional funding to cover the cost of it.

If we want to highlight anything, we should be highlighting the extensive process that exists and the judicial scrutiny that it includes, which is what my amendment does.

The stated mission of the SEC is to protect investors; not give them more redtape; maintain fair, orderly, and efficient markets; and facilitate capital formation. Let's help them do that--not just make them jump through unnecessary, costly, and duplicative hoops.

The underlying bill, the Republican bill, is a prescription for paralysis of the SEC's ability to protect investors. I urge my colleagues to support my amendment, and I reserve the balance of my time.

I would like to point out to my colleague that the circuit court decision underlines the point that I'm making in my amendment. It says clearly that there are cost-benefit analyses that are required by the SEC, and it made clear that there is a judicial review, that not only is analysis required, but you can always appeal to the court.

I yield my remaining time to the distinguished ranking member from the great State of California, Maxine Waters.