Another Lame Duck Session Horrorshow, the “First, Let’s Kill All The Regulators” Bill

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No matter how bad things seem to be, there are always ways for them to become worse. While the campaign against Medicare and Social Security is being couched in the sort of faux inevitability that has become familiar via European austerity measures, other pernicious lame duck session measures are moving forward in the hope no one will notice.

Dave Dayen wrote up a remarkably ugly one last Friday. Here we have just been through a wreck-the-economy level global crisis which was in large measure due to deregulation. The measure underway would not only weaken already pathetic regulators like the SEC but for good measure would hobble other ones like the Nuclear Regulatory Commission (after Fukushima, how can anyone with an ounce of sense argue for less stringent oversight of nuclear facilities?). From Dayen:

The Senate Homeland Security and Governmental Affairs Committee, under the direction of outgoing chair Joe Lieberman, plans to pass the Independent Agency Regulatory Analysis Act, S.3468, out of committee and into a fast track process. Mark Warner, Susan Collins and Rob Portman are the drives forces behind it. Americans for Financial Reform and other groups have raised alarms about it.

The bill would, according to AFR, strip away independence from various regulatory agencies, including the Securities and Exchange Commission, Commodity Futures Trading Commission, OSHA, the Nuclear Regulatory Commission, the FCC and the Consumer Financial Protection Bureau. These and more agencies would have to submit additional cost-benefit analyses to the executive branch, as well as submitting their rules and regulations for executive branch review. The immediate effect of this would be to slow implementation of things like Dodd-Frank. Review processes take time, and adding an executive branch layer gives Wall Street and other corporate interests another point of attack against various regulations. Heads of all the major regulatory agencies have already complained in a joint letter that the bill would give the executive branch far too much ability to influence their policy decisions.

Americans for Financial Reform writes:

Existing cost-benefit analysis requirements, and related legal challenges, are already a major source of delay in financial rulemaking. S. 3468 would add at least thirteen new resource-intensive analyses of regulatory costs before a rule can be finalized. In addition, the Office of Information and Regulatory Affairs (OIRA) would get to review any significant new rule, guidance, or policy – a process could add far more time and possibly lead to new rules being abandoned altogether. OIRA has a long standing reputation for blocking environmental and safety regulations, as well as generally being sympathetic to industry arguments that regulation is excessively costly. The big banks could use their influence to turn this tiny office into a bottleneck for all financial regulation. Wall Street lobbyists would have another powerful set of tools to delay and derail the implementation of the safeguards that are needed to protect our banking system and the wider economy.

AFR asks that all members of the Senate Homeland Security Committee get a phone call, to object to this gutting of the regulatory process. It’s bad enough that partisan officials get installed in these agencies, but this would just make the process of influence over the agencies complete.

Lieberman was one of the moving forces behind reducing the SEC from being a competent, even feared, agency to the mainly toothless overseer it is now. Clinton had installed Arthur Levitt, former head of American Stock Exchange, as SEC chairman; he was no doubt assumed to be friendly towards securities firms. But Levitt came out of the brokerage business and believed firmly in protecting small investors. Even with that narrow vision of the SEC’s role Lieberman, the Senator from Hedgistan, would threaten Levitt with cutting the SEC’s budget when he implemented pro-investor programs. So even though Lieberman isn’t one of the lead actors behind this measure, it is completely consistent with his history of unleashing financial firms to prey on a largely unsophisticated public.

I hope you’ll take the trouble to call or e-mail the members of the Senate Homeland Security Committee:

Joe Lieberman, Connecticut, Chairman
Carl Levin, Michigan
Daniel Akaka, Hawaii
Tom Carper, Delaware
Mark Pryor, Arkansas
Mary Landrieu, Louisiana
Claire McCaskill, Missouri
Jon Tester, Montana
Mark Begich, Alaska
Susan Collins, Maine, Ranking Member
Tom Coburn, Oklahoma
Scott Brown, Massachusetts
John McCain, Arizona
Ron Johnson, Wisconsin
Rob Portman, Ohio
Rand Paul, Kentucky
Jerry Moran, Kansas

This is the Senate contact information page, which has Washington phone numbers and e-mail addresses. Calling is actually more effective (but if you don’t have time to call, please e-mail!), and I suggest you call the Senators at their state offices rather than the DC offices; I’m told those calls are taken more seriously. Thanks!

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  1. jake chase

    Not to quibble with the NEED for regulation, but the SEC at least has been at best a useless, counterproductive, irksome nuisance to small business finance and a staunch supporter of and apologist for big company fraud for at least forty-five years. When, exactly, did you find it to be a ‘competent, even feared, agency’, and what do you think it did to deserve this accolade?

    1. digi_owl

      I guess it is the age old issue of who watches the watchers. Or in this frame, who regulates the regulators.

      1. wunsacon

        The *voters* are supposed to watch the regulators. But, after decades of trying to reverse the New Deal, the business press convinced half the voters into believing in self-regulation.

      2. wunsacon

        Also, with gerrymandering, the GOP — and their relatively more crooked, wealthy benefactors — keep more seats/power than they would otherwise retain.

        Ahnuld once include “non-partisan, computer-driven districting” as one of his pre-election promises. Too bad he made enemies with the nurses’ union instead of fulfilling that campaign promise.

    2. Yves Smith Post author

      I can’t disagree with you more. I was on Wall Street in the 1980s. The SEC was respected and feared then, thanks to its chief of enforcement in the 1970s, Stanley Sporkin.

      Anyone who invests in a company (unless it’s a private deal, he knows the owners and has vetted the business PERSONALLY) without audited financials and adequate disclosure is a fool. I’m not sympathetic with “small business owners” who want to raise money from anonymous parties and bitch that it’s hard. The normal route for funding small businesses is savings, friends, family, credit cards and other sources of debt.

  2. Paul Walker

    This is all about moving so called independent government actors under the absolute power of the unitary executive. The banks must be convinced there are cost synergies to be captured once all government functions are under the undisputed control of the unitary executive rendering not only independent regulators obsolete, but the congress and courts as well.

  3. Middle Seaman

    This is yet another example of a solution to a non existent problem.

    Shame on senator Warner for supporting the measure. Collins and Portman are Republicans who know too well that the earth is flat. Why work so hard, they can eliminate regulations altogether. After all everyone in the country is on hir best behavior.

    It’s always best if you call your own senator. They will ask for your address in most cases. My senators are not on the committee (Maryland).

    1. cwaltz

      Warner is a complete ass and it is my hope that if the progressives were to mount a challenge to any Senator that is up in 2014 that they start with mr buy partisan. In addition to Mr Business’ anti regulatory stance he’s also one of the driving forces on the bi partisan “save” social security front.

  4. timotheus

    Today is a good day for phoning senators because many offices are not open, and you can take a long as you want on their voicemails. You can also avoid the issue of whether or not you are in their state.

  5. Doc Holiday

    fast track process

    Washington lobby groups either use the nazi-like blitzkrieg method to overwhelm people (just as walmart does in every community) or they kill topics with a painfully slow death process, where people forget what they were talking about.

  6. Gil Gamesh

    One can see the obvious connection between Homeland Security and castrating federal agencies tasked with oversight of large criminal organizations (corporations was sorry).

    The American people would be far better off to give Lieberman 500 million to resign, renounce his US citizenship, and go live in Gaza.

    1. Susan the other

      The Senator from ” Hedgistan” – yes this sounds like the guy we all know. Funny nobody told him finance can’t even tie its own shoes let alone do a cost-benefit analysis.

  7. Chauncey Gardiner

    Lots of diversion and obfuscation during Lame Ducks, isn’t there? Also a time when those pieces of legislation that are so near and dear get “wrapped up” and delivered along with the COD?

    Btw, why are Petraeus & his associate being dragged through the mud… really?

  8. rob

    To all things….ceasar…\
    I am now hearing experts/historians(no one of any consequence;fox types) describe how the founders were TRYING to create a king-like office for the executive for this neww country, with their unitary executive leanings….and I have not heard radio commentators say…WHOA there….
    where is the separation of powers in the new regulatory structure…where are the co-equal branches?..nevermind what the founders thought of various european kings/royalty
    the script is changing before our very eyes.
    surely, we have always been at war with afghanistan, and russia has always been our friend….

    1. diptherio

      Interesting…I came across the same argument (that some of the “founding fathers” wanted a new American monarchy) in the book ‘American Aurora,’ a wonderful history of early American by Richard Rosenfeld. Adams, in one of his letters, referred to monarchy as “that safe harbor to which all societies must eventually return.” From what I can make out, Adams, at least, was hoping to set up a new monarchy, and he definitely raved about how the Senate would be the sole preserve of the highly monied.

      Not that any of that justifies our current oligarchy or this unitary executive nonsense.

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