Supporters of financial reform, caught off balance by an end-of-the-year push in the Senate to subject a wide range of new regulations to greater scrutiny, are reacting frantically to what they see as a threat to undermine the Dodd-Frank Act.
The source of their anxiety is legislation introduced early last month by Sen. Rob Portman, R-Ohio. The bill has a chance to move quickly to a vote on the Senate floor, although that possibility became more remote Wednesday when a potential committee vote on the measure was delayed until Nov. 15.
The legislation has the support of Democratic Sen. Mark Warner, and its opponents fear that other Senate Democrats will join him.
"The bill has really been one of these D.C., under-the-radar-screen efforts to really gut some stuff that if it was brought to the surface would never pass muster," said one Democratic Senate aide who expressed alarm. "People are not paying attention. It's going to catch people off guard."
The bill would require independent federal agencies—including the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Commodity Futures Trading Commission—to conduct more rigorous analyses of the regulations they propose.
The Federal Reserve Board would get an exemption from the bill's requirements for its monetary policy duties, but there is some confusion on Capitol Hill about how far the central bank's exemption would extend.
Agencies contacted for this article declined to comment on the record. But the FDIC, the Fed, the CFPB and the SEC have all expressed concerns to lawmakers about the legislation, according to a Senate source.
Spokespeople for Portman, Warner and Republican Sen. Susan Collins, another co-sponsor of the legislation, did not return calls seeking comment. But industry supporters of the bill argue that their foes are exaggerating its potential impact.
While the measure would require independent agencies to compare the costs and benefits of a proposed regulation, and then to submit that analysis to the executive branch for review, nothing would stop the agencies from moving forward with a regulation even if the executive branch found the analysis lacking, the legislation's supporters say.
"We think that as we try to implement the regulations, the cost-benefit analysis is a crucial piece of the overall analysis," said Scott Talbott, senior vice president of public policy at the Financial Services Roundtable, which supports the bill. "The goal here is to implement the new policies under Dodd-Frank, but we have to be careful not to undermine the economic recovery."
James Ballentine, executive vice president of congressional relations at the American Bankers Association, said his organization welcomes any effort that would allow a full analysis of the new regulations the banking industry is facing.
"And to the extent that this bill or any other bill would allow a fair analysis of, or review of these regulations, we would certainly appreciate it," he said.
Portman, the first-term Ohio senator who is sponsoring the legislation, was director of the White House Office of Management and Budget during President George W. Bush's administration. His bill would give new authority to the Office of Information and Regulatory Affairs, which is located inside OMB.
Portman was reportedly a candidate to be Republican presidential candidate Mitt Romney's running mate, and his proposal bears some similarities to
The legislation would allow the president to require independent agencies to take up to 13 additional steps before issuing a new rule. Among those potential requirements is a cost-benefit analysis, which is already required of executive branch agencies such as the Environmental Protection Agency.
