Sen. Elizabeth Warren said Thursday that Congressionally mandated cost-benefit analyses for rule-making in financial regulation can harm consumers by often giving financial industry lobbyists a chance to slow things down and build in profitable exceptions for the companies and trade groups that hire them.
While the senator didn’t note it, the need for the Securities and Exchange Commission to justify rules on cost-benefit grounds has long been a mantra of Congressional Republicans
The SEC’s Division of Economic and Risk Analysis has been given substantial increases by Republican-dominated House and Senate committees and has been the only unit of the regulator specifically mentioned in their budget bills.
Warren’s attack on cost-benefit requirements came in a speech where she claimed industries have unduly influenced the rule-making process from start to finish.
“At every stage -- from the months before a rule is proposed to the final decision of a court hearing a challenge to that rule -- the existing process is loaded with opportunities for powerful industry groups to tilt the scales in their favor,” the Massachusetts Democrat said.
To lessen the power of industry in federal rules and give more power to consumers, Warren advocated cracking down on the revolving door of employees between federal regulators and the companies they oversee along with an end to golden parachutes for executives who enter government.
Other steps that she called for to lessen industry influence are the disclosure of all meetings between regulators and interested parties, both before and during rule-making, and the mandatory disclosure of financial arrangements and editorial relationships associated with regulatory comments.
Her comments came during the Regulatory Capture Forum hosted by the Administrative Conference of the United States in Washington, D.C.
Also at a Senate banking committee meeting on Thursday, she chastised Finra’s CEO Richard Ketchum for being too lax in taking bad actors off the street.
She claimed financial advisors with significant violations are working in the industry in large numbers where they are likely to encounter unsophisticated investors.