[Congressional Record (Bound Edition), Volume 163 (2017), Part 1]
[House]
[Pages 816-829]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   SEC REGULATORY ACCOUNTABILITY ACT


                             General Leave

  Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members 
may have 5 legislative days in which to revise and extend their remarks 
and to submit extraneous material on H.R. 78, to improve the 
consideration by the Securities and Exchange Commission of the costs 
and benefits of its regulations and orders.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to House Resolution 40 and rule 
XVIII, the Chair declares the House in the Committee of the Whole House 
on the state of the Union for the consideration of the bill, H.R. 78.
  The Chair appoints the gentleman from California (Mr. McClintock) to 
preside over the Committee of the Whole.

                              {time}  1415


                     In the Committee of the Whole

  Accordingly, the House resolved itself into the Committee of the 
Whole House on the state of the Union for the consideration of the bill 
(H.R. 78) to improve the consideration by the Securities and Exchange 
Commission of the costs and benefits of its regulations and orders, 
with Mr. McClintock in the chair.
  The Clerk read the title of the bill.
  The CHAIR. Pursuant to the rule, the bill is considered read the 
first time.
  The gentleman from Texas (Mr. Hensarling) and the gentlewoman from 
California (Ms. Maxine Waters) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. HENSARLING. Mr. Chairman, I yield myself such time as I may 
consume.
  I rise in support of H.R. 78, the SEC Regulatory Accountability Act.
  I thank the gentlewoman from Missouri (Mrs. Wagner) for leading this 
effort in the House.
  This bill is technically about something called economic analysis or 
cost-benefit analysis. That may sound like Ph.D. economics, but it is 
really about kitchen table economics because, Mr. Chairman, it is truly 
about whether we are going to have a stronger economy--one that creates 
good-paying jobs so that parents can afford to raise their children 
today and these same children can have a brighter future tomorrow. It 
is about making sure we have an accountable government that expands 
personal opportunity, not government bureaucracy.
  Mr. Chairman, I think we all know that small businesses are truly 
America's job engine. They create nearly two-thirds of all new jobs in 
our economy. Our economy works better for all when small businesses can 
focus on creating jobs and on serving their customers rather than 
navigating needless government red tape.
  Unfortunately, for America's small businesses, bureaucratic red tape 
has no better friend than the Obama administration. It has issued more 
than 4,400 final regulations, with an astronomical cost to all of us of 
$1 trillion. Just since the election on November 8, the Obama 
administration had cynically issued 145 midnight regulations with a 
cost of more than $21 billion.
  For anyone who believes that this doesn't hurt our small businesses, 
they need to listen to their constituents, because I certainly listen 
to mine. I heard from a small business owner named Chris, who is back 
in my district and who wrote me:

       We have seen wave after wave of Federal regulations affect 
     our ability to grow. The costs associated with additional 
     reporting, auditing, and compliance are massive. The money 
     spent is significant and costs jobs and potential jobs.

  Mr. Chairman, he is exactly right. The true cost of Washington red 
tape cannot just be measured in dollars. The true cost includes the 
jobs not created, the small businesses not started, and the dreams of 
our children not fulfilled. Ill-advised laws like the Dodd-Frank Act 
empower unelected, unaccountable bureaucrats to callously hand down 
crushing regulations without adequately considering what impact those 
regulations have on jobs.
  As one former SEC Commissioner testified before the Financial 
Services Committee, which I have the honor of chairing, these 
Washington elites have forgotten the key to sensible regulation:

       The most appropriate regulatory solution should be the one 
     that imposes the least burden on society while maximizing 
     potential benefits even if that means choosing not to 
     regulate at all.

  Although the Securities and Exchange Commission is one of the few 
Washington agencies that engages in at least some base level of 
economic analysis, putting this requirement into law is definitely 
preferable to current agency procedures. After all, the SEC's recent 
interest in economic analysis came only on the heels of numerous 
Federal courts throwing out some of its regulations because the 
Commission failed to adequately take into account, again, the true 
costs and benefits of its rules.
  Passing this bill will erase any doubt that the Securities and 
Exchange Commission must conduct sound economic analysis. It must 
consider the impact of their rules on our jobs and our family budgets. 
That is what cost-benefit analysis is all about.
  Mr. Chairman, we may hear today from the usual suspects--the 
opponents of this bill--that somehow this is meant to hinder the 
rulemaking process and encourage litigation against the SEC. You will 
hear these same people say, once again, that this is somehow dangerous. 
Mr. Chairman, what is dangerous is being ignorant of the impact the 
proposed regulations will have on our economy and on the American 
people's wallets before they get implemented. That is what is 
dangerous.
  What is interesting, Mr. Chairman, is that Presidents, frankly, of 
both parties seem to agree. Even Presidents Clinton and Obama directed 
independent agencies to engage in, essentially, exactly the same 
procedures that H.R. 78 would make into law. Such irony, Mr. Chairman, 
that some Democrats will come to the floor today and oppose codifying 
into law Clinton and Obama policy. Again, the irony of it all.
  I urge all Members to join me in supporting this bill because we must 
hold

[[Page 817]]

Washington accountable to the American people. We must build a 
stronger, healthier economy so struggling Americans can get back to 
work and achieve financial independence.
  Mr. Chairman, I reserve the balance of my time.
  Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself such 
time as I may consume.
  Mr. Chairman, just as I opposed the bill before us today in the 
previous three Congresses, I rise in opposition to it now. Republicans 
have crafted H.R. 78 to tie the hands of the Securities and Exchange 
Commission, the SEC, and to prevent it from issuing new rules to 
address market failures and protect investors. At the same time, the 
bill would enable the Trump administration to easily repeal important 
Dodd-Frank rules by tilting the SEC's decisions toward what is best for 
industry and, worse, what enriches the President-elect and his cronies.
  Before I discuss H.R. 78, I think it is important to point out that 
14 members of the Financial Services Committee, as well as the millions 
of Americans they represent, are being denied the opportunity to 
discuss this bill through hearings and markups. We are barely into the 
second week of this Congress and the Republican leadership is 
completely ignoring regular order--despite Speaker Ryan's declaration 
less than a week ago of a return to regular order--by skipping the 
committee process to bring this bill to the floor; but this is par for 
the course.
  In the other Chamber, Senate Republican leadership is similarly 
jamming Donald Trump's conflicted nominees through the confirmation 
process even before the FBI has completed background checks. And with 
barely 10 days until his inauguration, Donald Trump has already given 
up on ``draining the swamp'' and has broken his promise to hold Wall 
Street accountable by nominating Wall Street insiders to nearly every 
key economic and regulatory post.
  Let me turn back to the problems with H.R. 78.
  During the past four Congresses, Republicans have sought to increase 
the cost-benefit requirements that are related to SEC rulemakings even 
though the Commission is already subject to stringent economic analysis 
for which it is held accountable. Current law requires the SEC to 
conduct the same economic analysis that is required of all agencies 
under the Paperwork Reduction Act, the Congressional Review Act, and 
the Regulatory Flexibility Act. Unlike other financial regulators, the 
SEC has additional statutory requirements to study how its rules affect 
market efficiency, competition, and capital formation.
  Additionally, in 2012, the SEC voluntarily issued internal guidance 
on economic analysis for rulemakings that closely follow Executive 
Order No. 12866. Since adopting this guidance, the SEC has dramatically 
expanded its economic analysis capabilities, including by increasing 
the staff and the budget of its economics division by more than 300 
percent over the last 5 years. In any other reality, the SEC would be 
held up as a model of effective economic analysis.
  When asked by Republicans in Congress to review the SEC's analysis, 
the inspector general concluded:

       We determined that the SEC's use of its current guidance 
     has been effective in incorporating economic analysis into 
     the rulemaking process.

  H.R. 78, however, goes much, much further in radically directing the 
SEC to no longer be concerned with the protection of investors. In 
fact, the only reference to investors anywhere in the bill is in a 
provision requiring the SEC to consider the impact these rules will 
have on ``investor choice.''
  The American public knows full well that ``investor choice'' is a 
code for industry's wanting to offer a menu of predatory products, such 
as subprime--toxic--mortgages or retirement products that are designed 
to bankrupt low- and middle-income Americans and line the pockets of 
Wall Street executives. Further suggestions that the bill is only 
codifying the cost-benefit executive orders are false as the bill omits 
one key provision from those orders: the prohibition of private rights 
of action, which is simply the right to sue.
  As a result, H.R. 78 provides industry with endless avenues to sue 
the SEC and, thereby, puts pressure on the regulator to adopt the rules 
it wants and to repeal everything else. What is worse, the bill is the 
first signal to Wall Street that the SEC is leaving the enforcement 
business. H.R. 78 provides no new funding for the SEC to address the 
substantial, analytic, and potential litigation responsibilities the 
bill would create even though the Congressional Budget Office estimates 
that the analytical workload alone would cost $27 million.
  Let's not fool ourselves that Republicans are going to increase the 
SEC's funding. That is at the top of their agenda--kill the SEC by 
taking away the funding that they need to be the cops on the block.
  Members of Congress just finished debating a bill that caps the SEC's 
sister agency, the Commodity Futures Trading Commission, at a woefully 
inadequate funding level for the next 5 years, denying the CFTC the 
hundreds of millions of dollars it needs to adequately police the swaps 
markets.
  Further, Donald Trump has nominated a lifelong defender of Wall 
Street's to lead the SEC, which I can only assume means that Trump's 
SEC will equally pillage the Commission's overworked enforcement staff 
to help pay for the Republicans' planned repeal of Dodd-Frank.

                              {time}  1430

  As President-elect Trump takes office next week, beginning what is 
the most conflicted administration in U.S. history, I urge my 
colleagues to join me, investor and consumer advocates, public pension 
plans, civil rights groups, labor unions, and supporters of financial 
reform in opposing H.R. 78 to ensure that the actions of Trump's SEC 
are in the interest of America's economic stability and not in Russia's 
or Wall Street's interests.
  I am amazed that the Republicans can be so blatant, so noncaring to 
come to us at this time with a bill that would basically take our cop 
on the block, the SEC, and literally obliterate it. I am absolutely 
amazed that they have the nerve and the gall to try this in face of 
everything that we already know about what they have done to strip it 
of its appropriate funding. But now with all of the debate and the 
concern about Trump and Russia and everything that is going on, they 
would come here with this bill today and try to pull this off.
  I reserve the balance of my time.
  Mr. HENSARLING. Mr. Chairman, I am very pleased now to yield 4 
minutes to the gentlewoman from Missouri (Mrs. Wagner), the author of 
the SEC Regulatory Accountability Act and the chairman of our Oversight 
and Investigations Subcommittee.
  Mrs. WAGNER. Mr. Chair, I thank Chairman Hensarling, the gentleman 
from Texas, for his leadership on this issue and on so many regulatory 
reform issues that we will be addressing this week and in the future.
  Mr. Chair, I am proud to sponsor and bring to the floor H.R. 78, the 
SEC Regulatory Accountability Act. This legislation fits perfectly with 
the theme of the week here in the House to advance key regulatory 
reform ideas as a change of pace from the outgoing administration.
  For the past 8 years, the amount of regulatory burden that has been 
placed on Americans and small businesses has been crushing. In 2015, 
Federal regulation cost almost $1.9 trillion. That is nearly $15,000 
per household in a hidden compliance tax.
  The Obama administration issued over 600 economically significant 
rules, which are those that have an economic impact of over $100 
million. As a result of this wave of regulations, we have been part of 
the slowest economic recovery in our lifetimes.
  We now have an opportunity to enact policy that ensures smart 
regulation going forward so that we are doing things in the best and 
most efficient way. The people have spoken, Mr. Chair. Business as 
usual in Washington is over and it is time to do things differently. 
There is, indeed, a better way.
  This legislation is really about what everyday Americans do when they 
are making major life decisions in weighing the costs and the benefits, 
the pros

[[Page 818]]

and the cons. Whether it is buying a car, buying a home, deciding 
whether to take out a loan to go to school, everyone must consider the 
core economic factors when making important life decisions.
  The SEC Regulatory Accountability Act places statutory requirements 
on the SEC when issuing rulemaking that ensures that, first, they 
identify the problem that regulation is trying to address; second, they 
weigh the cost and benefits to ensure that the benefits justify costs 
of compliance; and thirdly, they identify and assess whether there are 
any available alternatives to rulemaking.
  Additionally, this bill contains a provision that requires the SEC to 
review its existing regulations every 5 years, at the minimum, to 
determine whether any such regulations are outdated, ineffective, or 
excessively burdensome, as well as requiring the SEC to modify, 
streamline, repeal, or even to expand regulations based on that review.
  As a regulator of our capital markets, the SEC has an immeasurable 
influence on our economy and the ability of small business and 
entrepreneurs to be able to access capital in order to innovate, grow, 
and most of all, create jobs.
  I strongly believe that this legislation is nonpartisan and common 
sense and what our government regulators should have been doing in the 
first place. The American people deserve a break from the irresponsible 
regulation they have grown accustom to over the past 8 years. There is 
a better way.
  I ask my colleagues to support this commonsense piece of legislation 
and urge passage of it through the House.
  Ms. MAXINE WATERS of California. Mr. Chairman, I yield 3 minutes to 
the gentleman from Texas (Mr. Gonzalez), a new member of the Financial 
Services Committee.
  Mr. GONZALEZ of Texas. Mr. Chairman, I support the regular review of 
regulations to ensure that they are still relevant to our ever-changing 
economy.
  Unfortunately, the retrospective review requirement in H.R. 78 is 
counterproductive and places heavy administrative burdens on the 
Securities and Exchange Commission, an already overburdened and 
underfunded regulator.
  Specifically, it required the Commission to review all of its rules 
within 1 year of an enactment, and to constantly review its rules every 
5 years thereafter, regardless of whether there is any cause for 
concern with a particular regulation. I find this appalling.
  That means the Commission will have to go back to 1934 and review 
every single rule, even ones industry likes and rules that have made 
our capital markets the envy of the world.
  Today the SEC has a number of formal and informal processes for 
intelligently identifying rules for review. For example, the Regulatory 
Flexibility Act requires the SEC to conduct a 10-year retrospective 
rule review, and the Paperwork Reduction Act requires periodic reviews 
of information collection burdens.
  Under the Regulatory Flexibility Act, the SEC publishes a plan to 
look at rules that have a significant economic impact on smaller 
businesses, inviting public comment on the rules, including how it 
could be amended to reduce the impact of many small businesses within 
my district and certainly around the country.
  In addition, the SEC has been conducting several broad-based reviews 
of rules on its own accord related to issuer disclosure, equity market 
structure, and even the definition of what an accredited investor is.
  As an already cash-strapped agency, the SEC, tasked with such an 
onerous retrospective rule review required by H.R. 78, would be forced 
to divert already scarce resources from other important tasks, 
including policing the markets for fraud and stopping bad actors before 
they can drain the life savings of investors and many retirees in my 
district and around the country. This is our seniors we are talking 
about.
  Looking at the bill as a whole, it appears that this is the point of 
the legislation: rather than have the SEC focus on its mission to 
protect investors and support many small businesses, H.R. 78 focuses on 
the burdens of the financial industry and repealing those rules.
  I oppose this bill.
  Mr. HENSARLING. Mr. Chairman, I yield 3 minutes to the gentleman from 
Michigan (Mr. Huizenga), the chairman of our Subcommittee on Capital 
Markets and Government Sponsored Enterprises.
  Mr. HUIZENGA. Mr. Chair, I rise today in support of H.R. 78, the SEC 
Regulatory Accountability Act, which would improve and strengthen the 
SEC's rulemaking process by requiring more rigorous economic analysis.
  What exactly does that mean?
  Well, an economic analysis is quite simple, frankly. It is a systemic 
approach to determine the optimum use of scarce resources involving 
comparison of two or more alternatives to achieve a specific objective 
under the given assumptions and constraints. That is a whole lot of 
words and jumbo. But what we need to do is make a comparison, what is 
going to be the benefit.
  Economic analysis takes into account the opportunity costs of 
resources employed and attempts to measure, in monetary terms, the 
private and social costs and benefits of a project to a community, an 
economy, or to an individual.
  In its simplest terms, the SEC would have to determine the costs and 
benefits of proposed regulations, as well as potential alternatives to 
determine a best direction forward, basically ensuring that the SEC is 
thoroughly assessing both the need for the regulation and adequately 
evaluating the potential consequences, both intended and unintended, 
and is there a benefit.
  Mr. Chairman, requiring economic analysis by Federal regulators is 
not a partisan issue. In fact, both President Clinton and President 
Obama issued executive orders requiring regulators to ensure that their 
rules were maximizing and achieving a net benefit.
  H.R. 78, the SEC Regulatory Accountability Act, would ensure 
consistent and effective application of the SEC's economic analysis 
guidance by building on the bipartisan effort to strengthen economic 
analysis requirements, as well as require a retrospective review of 
existing regulations for independent agencies like the SEC.
  Specifically, the bill would enhance the SEC's existing economic 
analysis requirements by requiring the Commission to first clearly 
identify the nature of the problem that would be addressed before 
issuing a new regulation--too often, we are just shooting at a target 
that we don't even know is actually a target--and to prohibit the SEC 
from issuing a rule when it cannot make ``a reasoned determination that 
the benefits of the intended regulation justify the costs of the 
regulation.''
  Additionally, H.R. 78 would require the SEC to assess the costs and 
the benefits of available regulatory alternatives, including the 
alternative of not issuing a regulation, and choose the approach that 
would maximize the net benefit. The SEC must also evaluate whether a 
proposed regulation is inconsistent or incompatible or duplicative of 
other Federal regulations.
  In testimony before the Subcommittee on Capital Markets and 
Government Sponsored Enterprises last year, former SEC Commissioner Dan 
Gallagher noted that the SEC Regulatory Accountability Act would 
``promote and improve economic analysis at the SEC and make the agency 
even more accountable to the investing public.'' He further testified 
that this bill ``will help ensure the economic analysis conducted by 
economists is firmly entrenched in every rulemaking the SEC conducts 
under the Federal securities laws.''
  The Acting CHAIR (Mr. Collins of New York). The time of the gentleman 
has expired.
  Mr. HENSARLING. Mr. Chair, I yield an additional 30 seconds to the 
gentleman from Michigan.
  Mr. HUIZENGA. Mr. Chair, I commend the gentlewoman from Missouri 
(Mrs. Wagner) for introducing this important piece of legislation, 
which will equip the SEC with the necessary tools to ensure that all 
future SEC regulations will meet these standards with

[[Page 819]]

the ultimate goal of achieving the SEC's statutory mission of 
protecting investors and facilitating capital formation.
  I urge my colleagues on both sides of the aisle to support this 
important bill.
  Ms. MAXINE WATERS of California. Mr. Chairman, I yield myself such 
time as I may consume.
  Let me point out how H.R. 78 tilts their decisionmaking process 
toward Wall Street. First, let's go back and review everything the 
President-elect said about Wall Street, and then we can understand 
exactly what is being done here.
  In August 2015, President-elect Trump told CBS: ``The hedge fund guys 
didn't build this country. These are guys that shift paper around and 
they get lucky. They make a fortune. They pay no tax. It's ridiculous, 
okay?''
  In January 2016, Trump told Iowans: ``I'm not going to let Wall 
Street get away with murder. Wall Street has caused tremendous problems 
for us.''
  I repeat, he said: ``Wall Street has caused tremendous problems for 
us.''
  In February of 2016, Trump said: ``I know the guys at Goldman Sachs, 
they have total control over Hillary Clinton.''
  In July of 2016, Trump tweeted: ``Hillary will never reform Wall 
Street. She is owned by Wall Street.''
  He also told Iowans: ``I don't care about the Wall Street guys. I'm 
not taking any of their money.''
  Now, Trump has totally betrayed his promise to drain the swamp. He 
has appointed Goldman Sachs bankers to the Treasury and the National 
Economic Council, and his pick to head the Securities and Exchange 
Commission is a lawyer whose career has been based upon defending Wall 
Street, including Goldman Sachs. This legislation today is part and 
parcel to that betrayal.
  This is how you do it: cost-benefit analysis, you can attach this to 
any and all monetary and financial services legislation. You can attach 
it wherever you would like and, thus, cause the delays, cause the 
undermining of legislation, put the SEC in the position where it has to 
defend in court, costing them more money that they don't have because 
they have denied them adequate funding.

                              {time}  1445

  This is what this is all about. How do we get our Wall Street friends 
and cronies back into the business, because Dodd-Frank began to deal 
with them and to reverse some of what had been happening for far too 
long. Now they come with this attack and they talk about cost-benefit 
analysis. Mr. Chairman, this is what they are going to use to ride 
their way back into making sure that they give the protection and the 
advantages to all of their friends on Wall Street.
  Mr. Trump was not about draining the swamp. He is about making sure 
that there is a swamp, digging it deeper and wider.
  I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, despite the personal attacks happening on 
the floor here, I am glad to see that we are making real progress. 
Apparently, we are making an impact here.
  With that, I yield 1\1/2\ minutes to the gentleman from New York (Mr. 
King).
  Mr. KING of New York. Mr. Chairman, I rise in support of H.R. 78, the 
SEC Regulatory Accountability Act. If passed, the SEC would be required 
to follow President Obama's executive order that requires a thorough 
cost-benefit analysis of new rules and a comprehensive review of 
existing regulations. Under current law, the SEC must consider the 
effect of its rules on ``efficiency, competition, and capital 
formation,'' and weighing costs and benefits is necessary to meet this 
requirement.
  Cost-benefit analysis is not a new idea. Agencies have done this kind 
of analysis for over 30 years. In fact, it is a bipartisan idea. In 
1981, President Reagan issued an executive order requiring Cabinet-
level agencies to engage in cost-benefit analysis, which President 
Clinton expanded with another executive order in 1993.
  Unfortunately, independent agencies are not subject to executive 
orders and those regulated by the SEC have suffered as a result. From 
2005 to 2012, SEC regulations were overturned consistently by the 
courts for inadequate economic analysis and unjustified costs. While 
the SEC has taken steps to improve its rulemaking process, H.R. 78 will 
ensure that future rules maximize economic benefit and companies do not 
face unnecessary hurdles when they access our capital markets. 
Democrats and Republicans often do not agree on policy, but I hope we 
can agree on the need for a fair, transparent, and informed process.
  I thank my distinguished colleague for introducing this vital 
legislation.
  Ms. MAXINE WATERS of California. Mr. Chairman, I yield the balance of 
my time to the gentlewoman from New York (Mrs. Carolyn B. Maloney).
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I thank the 
gentlewoman for yielding me the time.
  Mr. Chairman, I rise in strong opposition to H.R. 78, the SEC 
Regulatory Accountability Act. This bill would require the SEC to do an 
absurd amount of time-consuming, duplicative cost-benefit analysis 
before they can even propose a rule. This is the fourth time, Mr. 
Chairman, that we are voting on this partisan bill because the previous 
three times the bill has been rejected by the Senate and President 
Obama has strongly opposed it.
  But let's be clear about what this bill is not about. It is not about 
ensuring that the SEC conducts a cost-benefit analysis on the rules. If 
that were the case, then no legislation would be necessary. The SEC is 
already required to conduct a cost-benefit analysis and has already 
adopted internal guidance on economic analysis that mirrors the exact 
requirements of this bill before us today. So the problem is not that 
the SEC doesn't currently conduct cost-benefit analyses or that it does 
it poorly; the real goal of this bill is simply to give the industry 
more chances to sue the SEC on cost-benefit grounds when it issues 
rules the industry does not like. That is essentially the only thing 
that would change if this bill were signed into law.
  The SEC's cost-benefit analysis would be the same, but the industry 
would have more opportunities to sue the SEC over alleged flaws in the 
cost-benefit analysis. And the threat of a lawsuit would force the SEC 
to divert even more of its scarce resources to cost-benefit analysis, 
which would delay the key reforms and undermine the SEC's ability to 
protect investors--their core mission.
  So I urge my colleagues to oppose this bill, as they have in three 
previous votes before this body.
  I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from 
Arkansas (Mr. Hill), the whip of our Financial Services Committee.
  Mr. HILL. Mr. Chairman, I thank the gentleman from Michigan for 
yielding me the time.
  Today I rise in support of H.R. 78, the SEC Regulatory Accountability 
Act.
  One can cut the hyperbole on the other side of the aisle with a knife 
today because we are not here talking about gutting enforcement. We are 
not here talking about exceptionally benefiting Wall Street operators. 
What we are talking about is enhancing the SEC's cost-benefit process.
  The Commission has made many positive strides toward its economic 
analysis in the past few years. This bill will enhance their efforts at 
ranking and providing resources to the rules that will in fact provide 
investor protection and provide efficient, competitive U.S. markets. 
Too many of their resources have been deviated on wild goose hunts 
related to the Dodd-Frank mandates.
  During this same time, we have experienced a sharp decline in initial 
public offerings and public companies generally. Largely, in my view, 
that is as a result of the regulatory burden and the costs associated 
with being a public company. This should be a concern to every Member 
of this body.
  This bill would make the SEC's rulemaking process more accountable by 
enhancing its cost-benefit analysis requirements and would require the 
Commission to revisit its rules after implementation to ensure they are 
actually achieving their intended purposes.

[[Page 820]]

  This bill does away with the notion that congressional mandates are 
exempt from cost-benefit analysis and requires the Commission to 
evaluate these rules as well--a good thing; Congress doesn't always get 
it right--in addition to identifying alternatives which might even 
include no rule at all, in short, using common sense.
  Requiring this sort of more robust economic analysis will also help 
the SEC set priorities. Chair White testified before our committee in 
the past Congress that they have 50 front burners. They can't decide 
what their most important agenda item is. Let's fix it, Mr. Chairman, 
by passing this bill.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. HUIZENGA. I yield the gentleman an additional 30 seconds.
  Mr. HILL. This bill will focus attention where attention is needed to 
benefit investors, our capital markets, and the economy the most. H.R. 
78, along with the HALOS Act that we passed in the House on Tuesday, 
will help ensure that the SEC regulations do not unnecessarily impede 
consumer and business access to capital.
  I thank the chairman for the time. I appreciate Mrs. Wagner for her 
work on this bill.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I enter into the 
Record the following letters of opposition to H.R. 78 signed by the 
Consumer Federation of America, Americans for Financial Reform, the 
California State Teachers' Retirement System, and the Council of 
Institutional Investors. These institutions represent various groups 
such as investors, consumers, public pension plans, labor unions, and 
communities of color.

                                               Consumer Federation


                                                   of America,

                                                 January 10, 2017.

  Vote NO on H.R. 78, the ``SEC Regulatory Accountability Act''--Bill 
 Would Paralyze the Agency's Ability to Protect Investors and Promote 
                            Market Integrity

       Dear Representative: This week the House is expected to 
     vote on H.R. 78, the ``SEC Regulatory Accountability Act.'' 
     The bill imposes burdensome new rulemaking requirements that 
     would prevent the agency from responding in a timely manner 
     either to emerging threats in the marketplace or to industry 
     requests for guidance or legal interpretations. As such, it 
     threatens to undermine the stability and integrity essential 
     to healthy capital markets, with harmful consequences for 
     investors, capital formation, and the overall economy. I am 
     writing on behalf of the Consumer Federation of America to 
     urge you to vote no when the bill is brought to the floor for 
     a vote.
       The bill is being promoted as a measure to enhance cost-
     benefit analysis at the Securities and Exchange Commission 
     (SEC). And, in that regard, certain of the bill's 
     requirements are relatively benign, such as the requirements 
     that the agency discuss the nature and scope of the problem 
     it is intending to solve when it engages in rulemaking, 
     carefully analyze available alternatives, and consider the 
     costs of the various alternatives as well as their relative 
     effectiveness in determining on a course of action. But these 
     are things the SEC already does, having learned the painful 
     lesson that failure to do so can result in its rules' being 
     overturned in court. Indeed, both the Government 
     Accountability Office and the SEC's Office of the Inspector 
     General have in recent years praised the agency for the 
     extent and quality of its cost-benefit analysis.
       Other of the bill's provisions are far more harmful. The 
     following are among the most serious problems with this 
     legislation:
       It requires the agency to adopt, not the most cost-
     effective regulatory approach, but the least burdensome 
     approach. As such, it prioritizes minimizing regulatory costs 
     over promoting regulatory effectiveness.
       The bill requires the agency to consider a number of 
     specific factors in assessing regulations, including their 
     effect on efficiency, competition, and capital formation as 
     well as investor choice, market liquidity, and small 
     business. Not included are any specific requirement to assess 
     their impact on investor protection or market integrity, 
     stability, and transparency.
       If the Conunission fails to address concerns raised by 
     ``industry groups'' related to costs and benefits, it must 
     explain its reasons. There is no comparable requirement to 
     explain any decision not to address investor concerns.
       It imposes these burdensome new requirements, not just on 
     regulations, but also on agency orders, interpretations, and 
     other statements of general applicability ``that the agency 
     intends to have the force and effect of law.'' Firms seeking 
     a timely response from the agency staff on issues important 
     to their business are likely to face significant delays if 
     the legislation is enacted.
       It requires the agency to engage in a constant 
     retrospective review of all its regulations every five years, 
     regardless of whether there is any cause for concern with a 
     particular regulation. Since the bill doesn't include any new 
     funding authorization to provide for this review, and 
     Congress has been highly reluctant to provide funding 
     increases commensurate with the agency's workload, the 
     inevitable result is that the agency will be forced to take 
     resources away from other more important regulatory 
     priorities to fund this generally meaningless exercise.
       While a reasonable and balanced analysis of costs and 
     benefits can promote effective rulemaking, this legislation 
     goes far beyond what is reasonable or balanced. It would tie 
     the SEC in procedural knots, keep its focus on an endless 
     review of existing rules rather than emerging issues, provide 
     endless grounds for legal challenge, causing a serious drain 
     on agency resources, and undermine the agency's focus on its 
     central mission of protecting investors and promoting market 
     integrity and stability. Indeed, the bill would exacerbate 
     rather than ameliorate the most serious short-comings in the 
     agency's current regulatory process--its inability to 
     complete rulemakings regarding pressing issues in a timely 
     manner.
       For these reasons, we urge you to vote ``No'' when H.R. 78, 
     the ``SEC Regulatory Accountability Act,'' is brought to the 
     floor for a vote. The only ``accountability'' this 
     legislation promotes, is the SEC's accountability to the 
     firms it is supposed to regulate rather than the investors it 
     is supposed to protect.
           Respectfully submitted,
                                                    Barbara Roper,
     Director of Investor Protection.
                                  ____

                                                 AFR Americans for


                                             Financial Reform,

                                 Washington, DC, January 12, 2017.
       Dear Representative: On behalf of Americans for Financial 
     Reform, we are writing to express our opposition to HR 78, 
     the ``SEC Regulatory Accountability Act''t6espite the fact 
     that the Securities and Exchange Commission (SEC) is already 
     subject to more stringent economic analysis requirements than 
     any other Federal financial regulator, and has greatly 
     increased its investment in economic analysis in recent 
     years, this legislation would impose a host of unworkable 
     bureaucratic and administrative requirements on the agency. 
     While they are justified using the rhetoric of ``cost benefit 
     analysis'', these requirements appear designed not to improve 
     SEC economic analysis but instead to make create major new 
     barriers to effective agency action.
       The most prominent new requirement would mandate that the 
     SEC identify every ``available alternative'' to a proposed 
     regulation or agency action and quantitatively measure the 
     costs and benefits of each such alternative prior to taking 
     action. Since there are always numerous possible alternatives 
     to any course of action, this requirement alone could force 
     the agency to complete dozens of additional analyses before 
     passing a rule or guidance. Placing this mandate in statute 
     will also provide near-infinite opportunities for Wall Street 
     lawsuits aimed at halting or reversing SEC actions, and would 
     be a gift to litigators who work on such anti-government 
     lawsuits. No matter how much effort the SEC devotes to 
     justifying its actions, the question of whether the agency 
     has identified all possible alternatives to a chosen action, 
     and has properly measured the costs and benefits of each such 
     alternative, will always remain open to debate.
       Like other agencies, the SEC is already required to conduct 
     economic analyses under the Paperwork Reduction Act, the 
     Congressional Review Act, and the Regulatory Flexibility Act. 
     Unlike all other financial regulators, the SEC also has 
     additional statutory requirements to examine how each rules 
     affect market efficiency, competition, and capital formation. 
     The SEC has also issued binding internal guidance on economic 
     analysis for rulemakings that closely follows Executive Order 
     12866 and OMB Circular A-4, and has more than tripled its 
     spending on economic and risk analysis since 2012.
       Despite these already existing commitments to economic 
     analysis, this proposal would load the agency with a crushing 
     burden of additional administrative burdens under the rubric 
     of ``cost-benefit analysis''. In addition to the enormous 
     task of identifying and analyzing every available alternative 
     to a course of action, the agency would be required to 
     perform half a dozen new analyses in addition to its current 
     requirements concerning market efficiency, competition, and 
     capital formation. These new requirements include analyses of 
     effects on small business, market liquidity, state and local 
     government, investor choice, and ``market participants''. 
     Notably, no new requirements concerning the protection of 
     investors or preventing another financial crash are included.
       This legislation also requires the SEC to review every 
     single regulation in effect within one year after the passage 
     of this Act, and again every five years thereafter, with an 
     eye to weakening or eliminating such regulations. This will 
     be an enormous drain on SEC resources and a distraction from 
     addressing emerging issues in our ever more complex financial 
     markets.

[[Page 821]]

       This legislation is transparently an effort to paralyze the 
     SEC and to empower Wall Street lawyers to overturn its 
     decisions, not to improve its analysis or decision making. We 
     urge you to reject it.
       Thank you for your consideration. For more information 
     please contact AFR's Policy Director, Marcus Stanley.
           Sincerely,
     Americans for Financial Reform.
                                  ____

                                        California State Teachers'


                                            Retirement System,

                                                 January 10, 2017.

     Re H.R. 78--SEC Regulatory Accountability Act.

     Hon. Jeb Hensarling,
     Chairman, House Committee on Financial Services, Washington, 
         DC.
     Hon. Maxine Waters,
     Ranking Member, House Committee on Financial Services, 
         Washington, DC.
       Dear Chairman Hensarling and Ranking Member Waters: I am 
     writing on behalf of the California State Teachers' 
     Retirement System (CalSTRS) to express our concerns regarding 
     the SEC Regulatory Accountability Act--H.R. 78.
       CalSTRS' mission is to secure the financial future and 
     sustain the trust of California's educators. We serve the 
     investment and retirement interests of more than 914,000 plan 
     participants. CalSTRS is the largest educator only pension 
     fund in the world, with a global investment portfolio valued 
     at approximately $193 billion as of November 30, 2016. We 
     have a vested interest in ensuring shareholder protections 
     are safeguarded within the U.S. Securities and Exchange 
     Commission's (SEC) rules and regulations, and thereby are 
     keenly interested in the rules and regulations that govern 
     the securities market. CalSTRS fully supports the mission of 
     the SEC, which is to protect investors, maintain fair, 
     orderly and efficient markets, promote competition and 
     facilitate capital formation.
       As a long-term shareholder, and fiduciary to California's 
     teachers, we believe it is vital to avoid unnecessary 
     regulatory costs that could obstruct the efficiency of the 
     capital markets and the economy. CalSTRS relies heavily on 
     the SEC shareholder protections in allocating capital on 
     behalf of California teachers. However, CalSTRS is unclear on 
     how the provisions of H.R. 78 would improve the cost-
     effectiveness of the SEC rulemaking process with the addition 
     of these cumbersome, unnecessary and seemingly duplicative 
     steps. As you know the Office of Inspector General, Office of 
     Audits (OIG) issued a report, Use of the Current Guidance on 
     Economic Analysis in SEC Rulemakings, which provided six 
     recommendations to strengthen the SEC's economic analysis 
     process. The report by the OIG found in its sample review 
     that the SEC ``followed the spirit and intent of the Current 
     Guidance as well as . . . justification for the rule, 
     considered alternatives and integrated the economic analysis 
     into the rulemaking process.'' The proposed ``SEC Regulatory 
     Accountability Act'' requires the SEC to address any 
     industry's or consumer group's concerns on the potential 
     costs or benefits in its final rule, including an explanation 
     of any changes that were made in response to these concerns 
     and if not incorporated, reasons why.
       Since this report, the Division of Economic and Risk 
     Analysis (DERA) at the SEC has devoted considerable resources 
     to integrate the six recommendations, having already 
     addressed what is being proposed in the ``SEC Regulatory 
     Accountability Act.'' We fully endorse the SEC's current 
     process, which ensures a robust cost benefit analysis in 
     rulemakings. The SEC, DERA and Office of the General Counsel 
     are highly committed to a cost effective rulemaking process 
     as evidenced by the current diligent economic analysis in the 
     SEC proposed and final rulemakings.
       The proposed amendments to Section 23 of the Securities 
     Exchange Act of 1934 through H.R. 78 are unnecessary as DERA 
     currently fulfills the actions outlined in this bill. We 
     believe H.R. 78 is redundant and unneeded with the steps 
     already taken by the SEC in their economic analysis 
     processes. Also alarming is that H.R. 78 is being brought 
     directly to the House Floor for action without any 
     consideration or vetting by the Committee on Financial 
     Services. CalSTRS does not support circumventing the vetting 
     process with an immediate vote, bypassing comprehensive 
     safeguards. If this this bill is pushed through an immediate 
     vote, we are concerned important rulemakings to enhance 
     investor protection will cease at the SEC, thereby impacting 
     shareholder protections and the mission of the SEC.
       We respectfully ask that our views be entered into the 
     record. We would be happy to discuss our perspective on this 
     issue with you or your staff at your convenience. Thank you 
     for your consideration.
           Sincerely,
                                                       Jack Ehnes,
     Chief Executive Officer.
                                  ____



                           Council of Institutional Investors,

                                                 January 11, 2017.
     Hon. Paul D. Ryan,
     House of Representatives,
     Washington, DC.
     Hon. Nancy Pelosi,
     House of Representatives,
     Washington, DC.
       Dear Mr. Speaker and Minority Leader Pelosi: I am writing 
     on behalf of the Council of Institutional Investors (CII). 
     CII is a nonprofit, nonpartisan association of public, 
     corporate and union employee benefit funds, and other 
     employee benefit plans, foundations and endowments with 
     combined assets under management exceeding $3 trillion. Our 
     member funds include major long-term shareowners with a duty 
     to protect the retirement savings of millions of workers and 
     their families. Our associate members include a range of 
     asset managers with more than $20 trillion in assets under 
     management.
       The purpose of this letter is to express our opposition to 
     H.R. 78, which we understand is likely to be considered on 
     the floor of the U.S. House of Representatives (House).
       As an association of long-term shareowners interested in 
     maximizing long-term share value, CII believes it is ``vital 
     to avoid unnecessary regulatory costs.'' However, it is not 
     clear to us how the provisions of H.R. 78 would improve the 
     cost-effectiveness of the U.S. Securities and Exchange 
     Commission's (SEC or Commission) existing thorough rulemaking 
     process or somehow benefit long-term investors, the capital 
     markets or the overall economy.


             SEC's Existing Economic Analysis is Extensive

       The Commission's rulemaking process is already governed by 
     a number of legal requirements, including those under the 
     federal securities laws, the Administrative Procedure Act, 
     the Paperwork Reduction Act of 1980, the Small Business 
     Regulatory Enforcement Fairness Act of 1996 and the 
     Regulatory Flexibility Act. Moreover, under the federal 
     securities laws, the SEC is generally required to consider 
     whether its rulemakings are in the public interest and will 
     protect investors and promote efficiency, competition and 
     capital formation.
       Since the 1980s, the Commission has conducted, to the 
     extent possible, an analysis of the costs and benefits of its 
     proposed rules. The SEC has further enhanced the economic 
     analysis of its rulemaking process in recent years. That 
     process is far more extensive than that of any other federal 
     financial regulator.


  H.R. 78 Would Unnecessarily Impede the SEC from Protecting Investors

       The provisions of H.R. 78 create a false and misleading 
     expectation that the SEC can reasonably measure, combine and 
     compare the balance of all costs and benefits of its 
     proposals consistent with its mandate to protect investors. 
     As explained by Professor Craig M. Lewis, former chief 
     economist and director of the SEC's Division of Economic and 
     Risk Analysis: ``[W]ith regard to investor protection, the 
     Commission is often unable to reasonably quantify the related 
     benefits or costs.''
       H.R. 78, if adopted, would impose upon the SEC a costly, 
     time consuming and incomplete analysis in which the 
     Commission would be hard pressed to determine that the 
     benefits of a proposal or rule ``justify the costs of the 
     regulation.'' As a result, we believe the provisions of H.R. 
     78 would unnecessarily impede the ability of the SEC to issue 
     proposals in furtherance of its mission to protect 
     investors--the element of its mission that, in our view, is 
     most critical to maintaining and enhancing a fair and 
     efficient capital market system consistent with economic 
     growth.


             H.R. 78 Should Be Subject to a Public Hearing

       Finally, as indicated, it is not clear to us how the 
     provisions of H.R. 78 would improve the cost-effectiveness of 
     SEC rulemaking or benefit long-term investors, the capital 
     markets or the overall economy. Moreover, we believe it is 
     unlikely that the House could demonstrate that the benefits 
     to investors of H.R. 78 justify the costs of implementing the 
     bill. In that regard, perhaps before the House votes on H.R. 
     78, the committee of jurisdiction; the House Committee on 
     Financial Services (including its fourteen new members) 
     should conduct a public hearing on the bill. The hearing 
     might include testimony from the SEC, investors, and other 
     knowledgeable market participants about, among other issues, 
     the potential costs and benefits of the proposed legislation.
       We would respectfully request that you oppose the passage 
     of H.R. 78.
       Thank you for consideration of our views. If we can answer 
     any questions or provide additional information on this 
     important matter, please do not hesitate to contact me.
           Sincerely,
                                                     Jeff Mahoney,
     General Counsel.
                                  ____


                             Better Markets


      Fact Sheet on H.R. 78, the SEC Regulatory Accountability Act

       H.R. 78 amends the Securities Exchange Act of 1934 and 
     requires the Securities and Exchange Commission (SEC) to 
     follow burdensome new procedures before it issues any new 
     rules.
       The SEC is the federal agency responsible for protecting 
     investors and markets by regulating securities professionals 
     and much of

[[Page 822]]

     the financial industry, including most of the activities on 
     Wall Street. H.R. 78 would impose significant new and onerous 
     requirements on the SEC, which would make it much more 
     difficult to effectively regulate Wall Street and protect 
     investors and our markets.
       Specifically, H.R. 78 requires the SEC to undertake 
     extensive cost-benefit analyses of every proposed rule, and 
     requires the SEC, before even proposing a new regulation, to 
     first identify every ``available alternative''--an impossible 
     standard to meet--and to then explain why each of those 
     alternatives was insufficient. Not only would this bog down 
     the agency with endless analysis of all possibilities, but it 
     would also result in endless litigation as industry 
     participants sue to overturn rules they don't like; industry 
     would only have to assert that the SEC hadn't considered some 
     alleged ``available alternative'' for the rule to be thrown 
     out. This would effectively paralyze the SEC from issuing any 
     new rules, leaving investors, customers and our markets 
     unprotected.
       Not just new regulations would be impacted; long-
     established, decades-old rules that have kept the markets 
     operating effectively for years would also be in jeopardy. 
     H.R. 78 requires the SEC to review every regulation on its 
     books within one year, and repeat the exercise every five 
     years. Because H.R. 78 does not provide additional funding 
     for the SEC, it is inevitable that these requirements would 
     overwhelm the agency, which would have to divert its already 
     limited resources away from policing Wall Street to endlessly 
     reviewing rules.
       Although H.R. 78 requires the SEC to consider a rule's 
     impact on the financial industry, there is no such 
     requirement for the SEC to consider its benefits to the 
     public. H.R. 78 does not explain why the SEC should weigh a 
     rule's costs to the industry more than it weighs its benefits 
     to the American taxpayer.
       Importantly, the SEC already does extensive economic 
     analyses of its rules. Former SEC Chairman Mary Schapiro 
     testified before Congress that ``The SEC's substantive rule 
     releases include more extensive economic analysis than those 
     of any other federal financial regulator.'' Independent 
     reviews by the Government Accountability Office and the SEC's 
     Inspector General concluded the SEC's economic analyses were 
     of a high standard and appropriately ``reflected statutory 
     requirements to consider certain types of benefits and 
     costs.''
       As noted by the Council of Institutional Investors, 
     requiring SEC to do cost-benefit analyses like those proposed 
     in H.R. 78 would ``undermine effective investor safeguards'' 
     and ``paralyze the [SEC's] regulatory activities.'' Former 
     SEC Chairman Arthur Levitt said these efforts were attempts 
     by Congress to ``emasculate'' independent agencies like the 
     SEC ``under the false guise of modernization.'' In an article 
     entitled ``The Trojan Horse of Cost Benefit Analysis,'' John 
     Kemp, a market analyst at Reuters, said bills like H.R. 78 
     ``are not really about cost benefit analysis at all. . . . 
     The standard they seek to enforce would be impossible to 
     meet.''

       115th Congress --January 2017

  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield 4 minutes 
to the distinguished gentleman from Texas (Mr. Al Green), a member of 
the Financial Services Committee.
  Mr. Al GREEN of Texas. Mr. Chairman, I thank the gentlewoman for 
yielding.
  I am absolutely amazed this legislation has progressed to this point. 
This is not a panacea. This is not legislation that will prevent some 
harm being done to mom-and-pops. This is about Wall Street. This is 
about multimillion-dollar corporations. It is not unusual here for 
those who would benefit from the use of those who live on Main Street, 
they would benefit from it by saying that the bill is for Main Street 
when in fact it is for Wall Street.
  This bill should properly be labeled the bill that the SEC rulings 
would come under stagnation, litigation, and decimation as a result of, 
because the way the bill is worded, there will be much litigation, and 
that litigation will tie the SEC up in court for many years. That will 
create the stagnation which will cause the SEC to be ineffective; and, 
as a result, the SEC, in terms of its rulemaking, will be decimated.
  Let's talk for a moment about a cost-benefit analysis. That is a very 
simple formula that can be used if you want to refinance your home and 
you want to get a different interest rate over a different period of 
time. All of the numbers associated with it are quantifiable. But if 
you want to do cost-benefit analysis in terms of fraud prevention, the 
prevention of fraud is not quantifiable; it is not knowable.
  Bernie Madoff made off with approximately $64 billion, and in so 
doing, he perpetrated one of the biggest frauds ever perpetrated on the 
United States of America, the American people. If we had a regulation 
in place to prevent that fraud that Bernie Madoff perpetrated, there 
would be no way of knowing that he would have perpetrated the $64 
billion fraud. You can't quantify legislation that prevents the fraud.
  If we had legislation in place to prevent the downturn in 2008, that 
would have prevented the 327s, the 228s, the teaser rates that 
coincided with prepayment penalties, the no-doc loans. If we had 
regulations in place to prevent it, then we would never have known the 
harm it would have caused the economy.
  That is what this bill will do. It will put the SEC in a position 
such that it cannot produce the rules to prevent the fraud that we can 
never measure. It is not knowable how much fraud will be prevented by 
the rules that the SEC promotes and produces.
  This legislation also does not allow the SEC to move at the speed of 
innovation. Innovation moves quickly. The SEC has to be able to produce 
rules to match the speed of innovation. This is why it was difficult to 
do something about what was happening to the economy leading up to 
2008. We didn't have the speed necessary, and now we are going to put a 
further burden on the SEC such that the SEC won't be able to respond to 
these new products that are coming on the market. And make no mistake, 
they will come on the market.
  The stock market crash of 1929 was something that rules and 
regulations could have prevented. They were not there. They put them in 
place. Glass-Steagall was one of them. It took 66 years, but they got 
Glass-Steagall. I don't know how long it is going to take them, but 
they intend to get Dodd-Frank. This is the first step in the direction 
of making Dodd-Frank impotent.
  Mr. HUIZENGA. Mr. Chairman, at this time I yield 3 minutes to the 
gentleman from Illinois (Mr. Hultgren), the vice chairman of the 
Capital Markets Subcommittee.

                              {time}  1500

  Mr. HULTGREN. Mr. Chairman, I rise today to speak in support of the 
SEC Regulatory Accountability Act. I thank the gentlewoman from 
Missouri (Mrs. Wagner) for championing this important legislation.
  Those of us who were in Congress last year will remember the 
leadership of Scott Garrett in ensuring our financial regulators, 
especially the SEC, make use of robust cost-benefit analysis while 
imposing rules on businesses and the American people.
  That is why this bill was reported from the Financial Services 
Committee with bipartisan support in the 114th Congress and has 
consistently received votes from both sides of the aisle in the past.
  Policymaking can be tough. There are always dozens of pros and cons 
that need to be considered. Every good idea, even those with the best 
of intentions, likely have minor drawbacks. However, the idea of 
ensuring benefits exceed the costs should not be a partisan one. We are 
simply saying that our government's policies should do more good than 
harm.
  You might be surprised to hear that the SEC's Inspector General has 
issued a report expressing several concerns about the quality of the 
SEC's economic analysis. It found none of the rulemaking it examined 
attempted to quantify either benefits or costs other than information 
collection costs. However, our job creators and investors know the 
scope of the potential cost is far broader than this.
  That is exactly what the SEC Regulatory Accountability Act does. It 
strengthens the cost-benefit analysis at a key regulator overseeing our 
financial markets.
  While the SEC has some existing cost-benefit-related policies put 
forth by its staff, this bill would strengthen those requirements and 
ensure that they are codified so that we can be certain that future 
generations benefit from prudent rulemaking.
  It would also subject the SEC to Executive Orders 12866 and 13563 
issued by Presidents Clinton and Obama.

[[Page 823]]

  Oddly enough, some have even made the argument that rules promulgated 
by the SEC should not be subject to cost-benefit analysis if they were 
mandated by Congress. I don't know where they got this idea, but it is 
a chilling reminder that Congress must do more to ensure that the SEC 
avoids politically motivated rulemaking that disregards the foundations 
of sound policy.
  In testimony before the committee last year, Dan Gallagher, a former 
Republican SEC Commissioner, noted the CEO pay ratio disclosure rule as 
a prime example of agency lawyers taking advantage of loopholes in the 
cost-benefit analysis rules and imposing significant burdens on public 
companies. This could become a slippery slope if not stopped by 
Congress.
  We have an opportunity today to protect our capital markets, 
investors, and job creators by ensuring that the SEC is doing less harm 
than good. I would urge all of my colleagues to vote in favor of sound 
policymaking criteria and support Mrs. Wagner's important legislation.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  I would like to share with my colleagues and the American public how 
American organizations that work day in and day out to fight to protect 
investors, consumers, minorities, workers, and pension plans view this 
bill.
  The director of investor protection of the Consumer Federation of 
America states: ``This legislation goes far beyond what is reasonable 
or balanced and, indeed, the bill would exacerbate, rather than end the 
most serious shortcomings in the agency's current regulatory process, 
its inability to complete rulemaking regarding pressing issues in a 
timely manner.''
  The general counsel of Council of Institutional Investors stated: 
``We believe the provisions of H.R. 78 would unnecessarily impede the 
ability of the SEC to issue proposals in furtherance of its mission, 
its mission to protect investors.''
  Finally, the Americans for Financial Reform stated: ``This 
legislation is transparently an effort to paralyze the SEC and to 
empower Wall Street lawyers to overturn its decisions and sue and not 
to improve its analysis or decisionmaking process.''
  I urge my colleagues to heed these warnings and to really hear what 
these representatives of the public are saying; and I urge them to vote 
``no'' on the underlying bill.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, may I inquire as to what is the balance 
of the time remaining on each side?
  The Acting CHAIR. The gentleman from Michigan has 10\1/4\ minutes 
remaining. The gentlewoman from New York has 6\1/2\ minutes remaining.
  Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from 
Florida (Mr. Ross).
  Mr. ROSS. Mr. Chairman, I thank my good friend from Michigan (Mr. 
Huizenga).
  I rise today in support of my good friend from Missouri (Mrs. 
Wagner's) legislation, H.R. 78, the SEC Regulatory Accountability Act.
  The American people have grown tired of unaccountable and unelected 
Washington bureaucrats bringing forward burdensome regulations without 
fully considering the effect on families in our districts.
  This simple and straightforward legislation would enact a statutory 
requirement for the SEC to outline enhanced economic analysis 
requirements for any new regulations before they can be enacted. It 
also requires a review of existing regulations to determine if they are 
unduly burdensome or duplicative.
  Accountability. The impact of burdensome regulations that lack a 
thorough vetting by the SEC can have an untold effect across our entire 
economy.
  Court cases, Government Accountability Office reports, and the SEC's 
own Office of Inspector General have raised important questions and 
recommended improvements to various components of the SEC's economic 
analysis in its rulemaking.
  This legislation would go further by prohibiting the SEC from issuing 
a rule when it cannot make a reasoned determination that the benefits 
of the intended regulation justify the cost of the regulation. Logic 
and reason.
  In closing, I support this good-government, commonsense legislation 
introduced by Chair Wagner. The SEC Regulatory Accountability Act will 
take an important step in preventing the SEC from implementing a 
regulation before understanding its full impact on our economy and on 
the families in our congressional districts and across the country.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  My Republican colleagues, regrettably, want to impose cost-benefit 
analysis that tilts towards industry costs because they know something 
that they don't want the American people to know. An impartial cost-
benefit analysis of Wall Street reform rules would inevitably 
demonstrate how wildly beneficial such rules are to the U.S. economy 
and to the lives of everyday Americans.
  Earlier this week, the bipartisan think tank, Third Way, found that 
Dodd-Frank's bank capital rules will add $351 billion--as in B, 
billion--to the U.S. economy over the next 10 years. This report 
presents a cost-benefit analysis that shows that, while lending becomes 
slightly more expensive when banks are required to maintain higher 
capital levels, the benefits of mitigating another financial crisis 
greatly exceed any costs. This report is one of many which Republicans 
intentionally ignore.
  Reducing the likelihood of another financial crisis does not come 
without cost, but the costs are worth it. Let us not forget the 
widespread human suffering that has been felt across this Nation 
because of the financial crisis. The 2008 financial crisis destroyed 
8.7 million American jobs, wiped out $2.8 trillion in retirement 
savings of ordinary Americans, and led to the foreclosure, the loss--15 
million Americans lost their homes due to financial mismanagement in 
this country.
  If those aren't significant costs for policymakers to consider, then 
what else is?
  Mr. Chairman, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from California (Mr. Royce), the chairman of the House Foreign Affairs 
Committee.
  Mr. ROYCE of California. Mr. Chairman, this has been an issue in 
Europe. It has been an issue in the United States. I would like to make 
the point that, with respect to looking at economic analysis and making 
certain that it is bipartisan, I think there is a way to make certain 
it is objective.
  As I look at the underlying text and then look at the amendment that 
we are accepting, we should reflect on this. We are going to have the 
SEC here look at both the protection of investors and the effects to 
ensure competition and efficiency. So I would explain to the Members 
that adding that into what I already thought was pretty exacting rules 
here in terms of an objective analysis should really succeed in our 
attempt here.
  And what is the attempt in this Regulatory Accountability Act?
  It is to make sure that the U.S. capital markets are unmatched in 
terms of their size, their depth, their resiliency, and transparency. 
And this Regulatory Accountability Act gives the Commission the 
opportunity to ensure that its rules and regulations, past and present, 
each of those are worth pursuing when measured against their economic 
costs.
  Growing access to capital, protecting investors, preserving the 
world's strongest capital markets are not mutually exclusive objectives 
here.
  The Acting CHAIR. The time of the gentleman has expired.
  Mr. HUIZENGA. I yield the gentleman an additional 15 seconds.
  Mr. ROYCE of California. And here is what I would like to point out. 
The European Union clearly recognizes this conundrum right now. They 
are launching a call for evidence to investigate the unintended 
consequences created by their regulatory framework

[[Page 824]]

because they are searching for balance in this, too, to make sure that 
they have retrospective examination.
  It is prudent. Frankly, as the effectiveness of regulation is 
measured by outcomes rather than volume in a situation like this, it 
drives us toward efficiency in the market.
  Mrs. CAROLYN B. MALONEY of New York. Mr. Chairman, I yield myself 
such time as I may consume.
  I want to point out that with Dodd-Frank and the reforms that the 
Democrats put in place, our economy bounded back faster and stronger 
than all of Europe. And I must say that one of the areas that we need 
to work on, where we are falling behind in our economy, is exports. We 
need to support exports.
  Despite all the talk that we hear from Republicans about enacting 
policies that support jobs and job creation, and the slew of tweets 
from the President-elect discouraging American companies from moving 
U.S. jobs overseas--and I support his efforts to stop our companies 
from going overseas--one proven job creator has remained on the 
sidelines, and that is the U.S. Export-Import Bank. This Bank has 
played a critical role in opening up international markets to U.S. 
exporters, which, in turn, helps create and preserve jobs here in 
America.
  The export-import banks of our competitors are supported by those 
countries five times more than what we do here in America. In fact, the 
ability of the Export-Import Bank to even operate, even though it makes 
money and has succeeded in building up American exports, has been 
hamstrung by the leadership of my good friends and colleagues on the 
other side of the aisle.
  In recognition of the Bank's success and supporting U.S. jobs over 
the past 80 years, in December of 2015 the House and the Senate voted 
with overwhelming majorities to reauthorize the Export-Import Bank. 
Despite this broad support, the Bank has remained hamstrung because, 
with three empty seats on its five-member board, the Bank lacks the 
quorum it needs in order to approve transactions over $10 million.
  Although President Obama nominated two individuals to serve on the 
Ex-Im's bipartisan board, the Senate Republican leadership refused to 
consider them, and Ex-Im's board remains without a quorum. They can not 
approve these exports. I think it is a national scandal.
  Indeed, it has been more than 18 months since the Export-Import 
Bank's board was last able to consider transactions, which has limited 
its ability to ensure U.S. workers and businesses of all sizes are able 
to compete around the world for contracts, as well as support jobs for 
the many small businesses that contribute to the supply chains for 
these high-value exports.

                              {time}  1515

  In fact, the bank currently has 50 transactions in its pipeline 
valued at nearly $40 billion, which, if approved, would support more 
than 100,000 American high-skill and high-wage jobs. I intend to bring 
this to the attention of the President-elect.
  So, as we talk today about how these Republican bills will create 
American jobs, I think it is important that we look at the GOP's full 
record on job creation or, might I say in this case, job prevention. As 
their record shows, Republican leaders have been all too willing to let 
U.S. jobs slip away to our foreign competitors.
  Until Congress restores Ex-Im to full functionality, U.S. companies 
selling expensive capital goods such as aircraft, locomotives, nuclear 
reactors, and turbines will remain at a unique competitive disadvantage 
because their foreign competitors all enjoy ample financing from their 
home-country export credit agencies--enough to easily knock U.S. 
companies out of the competition. This is unfair.
  We cannot compete and win in the global economy unless we support our 
businesses. We will lose global market share in key sectors such as the 
satellite industry, aerospace, and telecommunications. We will lose 
tens of thousands of jobs as some of the biggest U.S. exports suffer 
declining overseas sales, and, eventually, some of these companies 
would be forced to move jobs to where export credit is still available. 
We have seen this reported in the news daily where they are moving to 
our competitors.
  So, in short, we need to support the Export-Import Bank. We need to 
not hamstring the SEC by requiring it to have unnecessary, time-
consuming, duplicative rules that are already in place and that allow 
people to sue them more easily.
  Mr. Chairman, I urge my colleagues on both sides of the aisle who 
care, as President-elect Trump does, about job creation to be opposed 
to this bill.
  Mr. Chair, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, may I inquire as to the balance of the 
time remaining?
  The Acting CHAIR. The gentleman from Michigan has 7 minutes 
remaining. The gentlewoman from New York's time has expired.
  Mr. HUIZENGA. Mr. Chairman, at this time, I do not intend to yield to 
the gentlewoman from New York, even though I struggle to understand how 
the Export-Import Bank had anything to do with what we are talking 
about here today.
  Mr. Chairman, I yield 2 minutes to the gentleman from Colorado (Mr. 
Tipton), a member of the Financial Services Committee.
  Mr. TIPTON. Mr. Chairman, the SEC Regulatory Accountability Act 
subjects the SEC to enhanced cost-benefit analysis requirements and 
requires a review of existing regulations.
  By promoting economic analysis requirements during the regulatory 
process, this bill ensures that regulation writing is data driven and 
not done on an ad hoc basis with little thought to the true impact the 
expanding regulatory net has on businesses and the economy.
  It is a mistake for regulators overseeing our financial system and 
the capital markets, including the SEC, to promulgate regulations 
without fully considering the costs and benefits, as well as all of the 
available regulatory alternatives.
  This bill also takes the commonsense approach of requiring the SEC to 
evaluate whether a proposed regulation is inconsistent with, or 
duplicative of, other Federal regulations. When our businesses are 
being overwhelmed by compliance obligations that demand more and more 
time and resources, it is crucial that our regulators do everything in 
their power to ensure that regulations are effective, streamlined, and 
nonduplicative to minimize impact.
  It is important to note that this legislation does not limit the 
SEC's rulemaking authority in any capacity. The bill appropriately 
strengthens the SEC's existing cost-benefit-related requirements to 
ensure that the true impact of regulations can be calculated.
  To advocate for the status quo and against this legislation shows a 
fundamental misunderstanding of the financial system and the regulatory 
process. This legislation is a vote of confidence that, with the 
appropriate tools and a data-driven approach, our regulatory agencies 
can create a framework of safety and soundness that does not unduly 
burden our economy.
  I am happy to lend my support to this bill and encourage my 
colleagues to support this commonsense measure. I, again, thank the 
gentlewoman from Missouri for her efforts on this legislation.
  Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from 
Georgia (Mr. Loudermilk).
  Mr. LOUDERMILK. Mr. Chairman, I thank the gentleman for yielding.
  Mr. Chairman, Americans have heard time and time again over the last 
8 years that our economy is in the slowest recovery since World War II. 
Why? It is because unelected bureaucrats bypass this body of Congress 
and continually push out hundreds of burdensome regulations onto 
American families who are struggling just to get by.
  The onslaught of regulations by this administration has proven to 
kill jobs, shut down businesses, and stifle our economic growth. But 
now it is time to make good on our promise to make a brighter future 
for Americans and begin to turn this Nation around.
  Just as the American people expect us to know what it is in a bill 
before we

[[Page 825]]

vote on it, it is equally important to know what is in a regulation.
  Most Federal agencies are required to conduct a thorough cost-benefit 
analysis of each regulation before finalizing it. But this isn't always 
the case for the Securities and Exchange Commission. While the SEC is 
subject to some cost-benefit requirements when a new regulation could 
have an overbearing impact on our marketplaces, they are exempt from 
having to identify alternative policies.
  I rise today in support of the SEC Regulatory Accountability Act 
because it will require the SEC to follow its own core principle of 
disclosure that it, in itself, enforces on the securities industry in 
this Nation. This bill would require the SEC to disclose all the costs 
and benefits of each proposed regulation to the public.
  We must not allow regulatory agencies to be a roadblock to job 
creation by failing to consider the impact proposed rules would have on 
our securities market. Additionally, this bill requires the SEC to 
clearly identify the nature of the issue before establishing a new 
regulation.
  Mr. Chairman, our economy cannot flourish without healthy capital 
markets. We must hold regulatory agencies to strict standards, just as 
they do the businesses they regulate across this Nation. This bill 
takes meaningful steps toward achieving these goals, and I urge my 
colleagues to vote ``yes.''
  Mr. HUIZENGA. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman 
from North Carolina (Mr. Budd), a new member of the Financial Services 
Committee.
  Mr. BUDD. Mr. Chairman, the debate over financial regulation is not 
just about more versus less. It is also about the idea that financial 
liberty and personal liberty are connected, and they have been for most 
of history.
  This goes back to the Middle Ages, when widespread use of a bill of 
exchange--basically, a check--made it much more difficult for 
government to wrongly take people's wealth. That development was one of 
the first building blocks of limited government.
  Now, today, we see a similar principle at work in global capital. 
Like the bill of exchange placing gold or silver out of the reach of 
government, the connected global economy allows capital to flow away 
from harsh regulation. Countries that get it right are the ones that 
win.
  There are a number of statistics that suggest that we are getting the 
short end of the stick in this arena. We are losing our financial 
competitiveness. For example, nearly 10 percent of foreign companies 
left the New York Stock Exchange this year, almost double the historic 
average. Finally, from 2010 to 2016, the United States slipped from 6th 
to 11th in the Index of Economic Freedom.
  While this problem has a number of causes, the Securities and 
Exchange Commission Regulatory Accountability Act will help improve our 
economic competitiveness by requiring that the SEC put its regulations 
through a strong cost-benefit analysis and review regulations that are 
just plain outdated.
  I urge a ``yes'' vote.
  Mr. HUIZENGA. Mr. Chairman, I yield myself the balance of my time.
  I would just like to point out to those watching on TV the earlier 
Democrat-sponsored hot air portion of the bill today.
  You heard about the Export-Import Bank. You heard about Bernie 
Madoff. You heard about the Dodd-Frank Act being the only answer to an 
economic crisis that was caused by a housing crisis which, by the way, 
the Dodd-Frank Act did nothing about. By the way, on the Bernie Madoff 
situation, the SEC ignored a whistleblower for 10 years.
  This bill has nothing to do with fraud, and it is not about a trial 
of the effectiveness or lack thereof of the SEC today. This is about a 
commonsense notion that we ought to actually identify the target that 
these rules are trying to hit and then find out if it is the right 
target and analyze that.
  What you see on the other side of the aisle is the philosophy that 
more is better: the more regulation that the SEC has, the more 
paperwork, a bigger budget with more employees. We are not sure what 
their effectiveness is, and we are not sure what exactly they are 
trying to achieve here, but all we can tell you is that more is better. 
Damn the costs; it doesn't matter.
  That is, obviously, not the intent that we have on this side of the 
aisle. We are trying to make sure that the proper protection of the 
investors is there. We are trying to make sure that the three parts of 
the SEC's mandate, of which one of those is capital formation and 
creating a robust atmosphere, are actually happening.
  I urge passage of the bill.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. All time for general debate has expired.
  Pursuant to the rule, the bill shall be considered for amendment 
under the 5-minute rule and shall be considered as read.
  The text of the bill is as follows:

                                H.R. 78

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``SEC Regulatory 
     Accountability Act''.

     SEC. 2. CONSIDERATION BY THE SECURITIES AND EXCHANGE 
                   COMMISSION OF THE COSTS AND BENEFITS OF ITS 
                   REGULATIONS AND CERTAIN OTHER AGENCY ACTIONS.

       Section 23 of the Securities Exchange Act of 1934 (15 
     U.S.C. 78w) is amended by adding at the end the following:
       ``(e) Consideration of Costs and Benefits.--
       ``(1) In general.--Before issuing a regulation under the 
     securities laws, as defined in section 3(a), the Commission 
     shall--
       ``(A) clearly identify the nature and source of the problem 
     that the proposed regulation is designed to address, as well 
     as assess the significance of that problem, to enable 
     assessment of whether any new regulation is warranted;
       ``(B) utilize the Chief Economist to assess the costs and 
     benefits, both qualitative and quantitative, of the intended 
     regulation and propose or adopt a regulation only on a 
     reasoned determination that the benefits of the intended 
     regulation justify the costs of the regulation;
       ``(C) identify and assess available alternatives to the 
     regulation that were considered, including modification of an 
     existing regulation, together with an explanation of why the 
     regulation meets the regulatory objectives more effectively 
     than the alternatives; and
       ``(D) ensure that any regulation is accessible, consistent, 
     written in plain language, and easy to understand and shall 
     measure, and seek to improve, the actual results of 
     regulatory requirements.
       ``(2) Considerations and actions.--
       ``(A) Required actions.--In deciding whether and how to 
     regulate, the Commission shall assess the costs and benefits 
     of available regulatory alternatives, including the 
     alternative of not regulating, and choose the approach that 
     maximizes net benefits. Specifically, the Commission shall--
       ``(i) consistent with the requirements of section 3(f) (15 
     U.S.C. 78c(f)), section 2(b) of the Securities Act of 1933 
     (15 U.S.C. 77b(b)), section 202(c) of the Investment Advisers 
     Act of 1940 (15 U.S.C. 80b-2(c)), and section 2(c) of the 
     Investment Company Act of 1940 (15 U.S.C. 80a-2(c)), consider 
     whether the rulemaking will promote efficiency, competition, 
     and capital formation;
       ``(ii) evaluate whether, consistent with obtaining 
     regulatory objectives, 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), 
     taking into account, to the extent practicable, the 
     cumulative costs of regulations; and
       ``(iii) evaluate whether the regulation is inconsistent, 
     incompatible, or duplicative of other Federal regulations.
       ``(B) Additional considerations.--In addition, in making a 
     reasoned determination of the costs and benefits of a 
     potential regulation, the Commission shall, to the extent 
     that each is relevant to the particular proposed regulation, 
     take into consideration the impact of the regulation on--
       ``(i) investor choice;
       ``(ii) market liquidity in the securities markets; and
       ``(iii) small businesses.
       ``(3) Explanation and comments.--The Commission shall 
     explain in its final rule the nature of comments that it 
     received, including those from the industry or consumer 
     groups concerning the potential costs or benefits of the 
     proposed rule or proposed rule change, and shall provide a 
     response to those comments in its final rule, including an 
     explanation of any changes that were made in response to 
     those comments and the reasons that the Commission did not 
     incorporate those industry group concerns related to the 
     potential costs or benefits in the final rule.

[[Page 826]]

       ``(4) Review of existing regulations.--Not later than 1 
     year after the date of enactment of the SEC Regulatory 
     Accountability Act, and every 5 years thereafter, the 
     Commission shall review its regulations to determine whether 
     any such regulations are outmoded, ineffective, insufficient, 
     or excessively burdensome, and shall modify, streamline, 
     expand, or repeal them in accordance with such review. In 
     reviewing any regulation (including, notwithstanding 
     paragraph (6), a regulation issued in accordance with formal 
     rulemaking provisions) that subjects issuers with a public 
     float of $250,000,000 or less to the attestation and 
     reporting requirements of section 404(b) of the Sarbanes-
     Oxley Act of 2002 (15 U.S.C. 7262(b)), the Commission shall 
     specifically take into account the large burden of such 
     regulation when compared to the benefit of such regulation.
       ``(5) Post-adoption impact assessment.--
       ``(A) In general.--Whenever the Commission adopts or amends 
     a regulation designated as a `major rule' within the meaning 
     of section 804(2) of title 5, United States Code, it shall 
     state, in its adopting release, the following:
       ``(i) The purposes and intended consequences of the 
     regulation.
       ``(ii) Appropriate post-implementation quantitative and 
     qualitative metrics to measure the economic impact of the 
     regulation and to measure the extent to which the regulation 
     has accomplished the stated purposes.
       ``(iii) The assessment plan that will be used, consistent 
     with the requirements of subparagraph (B) and under the 
     supervision of the Chief Economist of the Commission, to 
     assess whether the regulation has achieved the stated 
     purposes.
       ``(iv) Any unintended or negative consequences that the 
     Commission foresees may result from the regulation.
       ``(B) Requirements of assessment plan and report.--
       ``(i) Requirements of plan.--The assessment plan required 
     under this paragraph shall consider the costs, benefits, and 
     intended and unintended consequences of the regulation. The 
     plan shall specify the data to be collected, the methods for 
     collection and analysis of the data and a date for completion 
     of the assessment. The assessment plan shall include an 
     analysis of any jobs added or lost as a result of the 
     regulation, differentiating between public and private sector 
     jobs.
       ``(ii) Submission and publication of report.--The Chief 
     Economist shall submit the completed assessment report to the 
     Commission no later than 2 years after the publication of the 
     adopting release, unless the Commission, at the request of 
     the Chief Economist, has published at least 90 days before 
     such date a notice in the Federal Register extending the date 
     and providing specific reasons why an extension is necessary. 
     Within 7 days after submission to the Commission of the final 
     assessment report, it shall be published in the Federal 
     Register for notice and comment. Any material modification of 
     the plan, as necessary to assess unforeseen aspects or 
     consequences of the regulation, shall be promptly published 
     in the Federal Register for notice and comment.
       ``(iii) Data collection not subject to notice and comment 
     requirements.--If the Commission has published its assessment 
     plan for notice and comment, specifying the data to be 
     collected and method of collection, at least 30 days prior to 
     adoption of a final regulation or amendment, such collection 
     of data shall not be subject to the notice and comment 
     requirements in section 3506(c) of title 44, United States 
     Code (commonly referred to as the Paperwork Reduction Act). 
     Any material modifications of the plan that require 
     collection of data not previously published for notice and 
     comment shall also be exempt from such requirements if the 
     Commission has published notice for comment in the Federal 
     Register of the additional data to be collected, at least 30 
     days prior to initiation of data collection.
       ``(iv) Final action.--Not later than 180 days after 
     publication of the assessment report in the Federal Register, 
     the Commission shall issue for notice and comment a proposal 
     to amend or rescind the regulation, or publish a notice that 
     the Commission has determined that no action will be taken on 
     the regulation. Such a notice will be deemed a final agency 
     action.
       ``(6) Covered regulations and other agency actions.--Solely 
     as used in this subsection, the term `regulation'--
       ``(A) means an agency statement of general applicability 
     and future effect that is designed to implement, interpret, 
     or prescribe law or policy or to describe the procedure or 
     practice requirements of an agency, including rules, orders 
     of general applicability, interpretive releases, and other 
     statements of general applicability that the agency intends 
     to have the force and effect of law; and
       ``(B) does not include--
       ``(i) a regulation issued in accordance with the formal 
     rulemaking provisions of section 556 or 557 of title 5, 
     United States Code;
       ``(ii) a regulation that is limited to agency organization, 
     management, or personnel matters;
       ``(iii) a regulation promulgated pursuant to statutory 
     authority that expressly prohibits compliance with this 
     provision; and
       ``(iv) a regulation that is certified by the agency to be 
     an emergency action, if such certification is published in 
     the Federal Register.''.

     SEC. 3. SENSE OF CONGRESS RELATING TO OTHER REGULATORY 
                   ENTITIES.

       It is the sense of the Congress that the Public Company 
     Accounting Oversight Board should also follow the 
     requirements of section 23(e) of such Act, as added by this 
     title.

     SEC. 4. ACCOUNTABILITY PROVISION RELATING TO OTHER REGULATORY 
                   ENTITIES.

       A rule adopted by the Municipal Securities Rulemaking Board 
     or any national securities association registered under 
     section 15A of the Securities Exchange Act of 1934 (15 U.S.C. 
     78o-3) shall not take effect unless the Securities and 
     Exchange Commission determines that, in adopting such rule, 
     the Board or association has complied with the requirements 
     of section 23(e) of such Act, as added by section 2, in the 
     same manner as is required by the Commission under such 
     section 23(e).

  The Acting CHAIR. No amendment to the bill shall be in order except 
those printed in part A of House Report 115-3. Each such amendment may 
be offered only in the order printed in the report, by a Member 
designated in the report, shall be considered read, shall be debatable 
for the time specified in the report, equally divided and controlled by 
the proponent and an opponent, shall not be subject to amendment, and 
shall not be subject to a demand for division of the question.


            Amendment No. 1 Offered by Mr. Al Green of Texas

  The Acting CHAIR. It is now in order to consider amendment No. 1 
printed in part A of House Report 115-3.
  Mr. AL GREEN of Texas. Mr. Chairman, I have an amendment at the desk 
as the designee of the gentlewoman from California (Ms. Maxine Waters).
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 3, line 3, strike ``and''.
       Page 3, line 8, strike the period and insert ``; and''.
       Page 3, after line 8, insert the following:
       ``(E) in consultation with the Office of Ethics Counsel of 
     the Commission, identify any former nongovernmental employer 
     of a Commissioner, Director, Deputy Director, Associate 
     Director, or Assistant Director that would receive direct or 
     indirect benefit from a rule or regulation, analyze the 
     benefits to such employer, and whether the regulation should 
     be amended to address any potential conflict of interest or 
     appearance of a conflict of interest.''.
       Page 6, after line 5, insert the following:
       ``(5) Conflicts of interest.--The Commission shall identify 
     the employers of any Commissioners, Directors, Deputy 
     Directors, Associate Directors, and Assistant Directors who 
     have left the Commission within five years of the scheduled 
     adoption of the final rule, and whether such employers 
     receive direct or indirect benefits, and whether the 
     Commission should amend the rule to address the identified 
     conflict of interest.''.
       Page 7, line 19, insert after the period the following: 
     ``The assessment plan shall also include an analysis of 
     whether and how any former nongovernmental employer of a 
     Commissioner, Director, Deputy Director, Associate Director, 
     or Assistant Director, or the current employer of a former 
     Commissioner, Director, Deputy Director, Associate Director, 
     or Assistant Director who departed the Commission within five 
     years of the scheduled adoption of the regulation, directly 
     and indirectly benefits from the regulation, and a 
     recommendation as to whether such regulation should be 
     amended to address the identified conflict of interest.''.

  The Acting CHAIR. Pursuant to House Resolution 40, the gentleman from 
Texas (Mr. Al Green) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. AL GREEN of Texas. Mr. Chairman, I think it appropriate to point 
out what the style of this bill is, what the words on the actual bill 
say. There seems to be some confusion with my colleagues on the other 
side as to whether or not this is a mom-and-pop bill.
  The bill itself says, ``A bill to improve the consideration by the 
Securities and Exchange Commission of the cost and benefits of its 
regulations and orders.''
  The Securities and Exchange Commission deals with Wall Street, deals 
with megabusinesses. This is not about a mom-and-pop store. This is not 
about the small business in the neighborhood.

[[Page 827]]

This is about megabusinesses desiring to have access to markets without 
the regulations necessary to protect investors.
  This bill, if it passes, will place the SEC in a mission impossible 
position because it will be impossible for the SEC to do what it needs 
to do to promote regulations that will prevent fraud. Either litigation 
will stop them or they won't be able to define and quantify the 
benefits associated with regulation that can prevent fraud.
  A good example has been presented, but some things bear repeating. If 
we had produced regulations that would have prevented Bernie Madoff 
from robbing the country of $64 billion, we wouldn't have known it, we 
couldn't quantify it, because it wasn't knowable.
  This bill puts the SEC in a position of having to do that which is 
not knowable because it would prevent fraud.

                              {time}  1530

  Now, having said this, the Waters amendment will at least allow us to 
curtail some of the conflicts of interest that can take place by 
persons who will come from some entity that works with persons on Wall 
Street or when they leave, go to an entity that works with Wall Street. 
Our regulators ought not be able to take their rules and regulations to 
companies and businesses that will impact Wall Street after they leave 
or impact their businesses once they are on Wall Street.
  This amendment that the Honorable Maxine Waters has presented would 
cause the SEC to identify, analyze, and address potential conflicts of 
interest in its proposed rules, and it would go on to make sure that 
persons who work for the SEC do not create conflicts of interest.
  We live in a world where it is not enough for things to be right; 
they must also look right. It doesn't look right for these Wall Street 
types, the persons from Goldman Sachs and related industries who will 
come to Wall Street, take jobs, and promote rules that benefit their 
former employers, nor does it look right for them to produce rules that 
will benefit employers that they will go to when they leave Wall 
Street.
  That is what this amendment will prevent. It is simple. It is not 
complicated, and it deals with conflicts of interest. I think this 
amendment ought to be supported.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I claim the time in opposition to this 
amendment.
  The Acting CHAIR (Mr. Palmer). The gentleman from Michigan is 
recognized for 5 minutes.
  Mr. HUIZENGA. Mr. Chairman, I feel compelled to point out to my 
colleagues that we are not paid by the word that is put into the 
Federal Register. I think, once again, you are hearing this example of 
more is better. It doesn't matter what the words say, just let's have 
more of them.
  We already have the SEC Chairman and the Commissioners covered by 
both governmentwide ethics laws and regulations as well as SEC 
supplemental ethics regulations which apply to all SEC employees. For 
example, they cannot participate personally and substantially in any 
matter that would have direct or predictable effect on his or her 
financial interests or imputed financial interests in the future, as 
required under the code.
  Also, unless they are specifically authorized by the SEC's ethics 
counsel, they should recuse from any matter in which he or she has a 
``covered relationship.'' Well, what is a covered relationship? Well, a 
covered relationship includes former employees, clients, and even a 
spouse's employer. Further, the SEC employees must report their 
financial holdings to the SEC's ethics counsel; and this requirement 
goes beyond, frankly, the governmentwide reporting requirement.
  Finally, the SEC Chairman or a Commissioner must not engage in any 
other business, employment, or vocation while in office; nor may he or 
she ever use the power of their office to influence their name to 
promote the business interests of others, as required by law.
  As such, I ask my colleagues to join me in opposing this amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. AL GREEN of Texas. Mr. Chairman, how much time do I have 
remaining?
  The Acting CHAIR. The gentleman from Texas has 1 minute remaining.
  Mr. AL GREEN of Texas. Mr. Chairman, let me say this in my 1 minute. 
It appears that the other side believes that nothing is better because 
that is what this bill would cause the SEC to produce--nothing. It 
would stagnate the SEC. It would place the SEC in litigation. It would 
literally decimate the SEC because you cannot quantify bills or 
regulations that will prevent fraud. You can't quantify it. I have 
given you the example.
  I know the public is listening. You need to weigh in on this, members 
of the public, because this is not about mom-and-pops. It is about 
megacorporations. This piece of legislation that Ms. Waters offers at 
least will deal with conflicts of interest beyond the person who 
happens to work with the SEC, which is what has been addressed. It will 
deal with conflicts of interest as they relate to the businesses that 
they will go to or the businesses that they have left.
  Mr. Chairman, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I will wrap up here by simply saying that 
the bill before us today is intending to clarify--or have the SEC, I 
should say, clarify what the goal and objective is of their proposed 
rule. Let's find out what they are trying to do, and then, more 
importantly, find out if it is actually effective.
  There might be a rule in place already somewhere else. The other side 
is trying to strike that provision. They are trying to say: No. No. It 
doesn't matter what the other hand of government is saying. We are 
going to just add more and more regulation added on.
  We need to have a clear understanding of what the objective is, what 
the target is, and whether it is an effective rule to get to that 
point. I just would encourage my colleagues to oppose the Waters-Green 
amendment.
  Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Texas (Mr. Al Green).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. AL GREEN of Texas. Mr. Chairman, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Texas will 
be postponed.


                Amendment No. 2 Offered by Ms. Velazquez

  The Acting CHAIR. It is now in order to consider amendment No. 2 
printed in part A of House Report 115-3.
  Ms. VELAZQUEZ. Mr. Chairman, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 4, line 1, insert after ``making'' the following: ``, 
     in addition to being in the interest of protecting 
     investors,''.
       Page 5, line 21, insert after the period the following: 
     ``Whenever pursuant to this paragraph the Commission is 
     engaged in a review, it shall consider whether an action is 
     necessary or appropriate in the public interest, the 
     protection of investors, and whether the action will promote 
     efficiency, competition, and capital formation.''.

  The Acting CHAIR. Pursuant to House Resolution 40, the gentlewoman 
from New York (Ms. Velazquez) and a Member opposed each will control 5 
minutes.
  The Chair recognizes the gentlewoman from New York.
  Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  Mr. Chairman, my amendment is simple and straightforward. It will 
help ensure the SEC fulfills one of its core mission functions--
protecting investors.
  As Members of Congress, we must never forget the lessons of the 
financial

[[Page 828]]

crisis and the Great Recession. Americans lost $14 trillion, suffering 
sharp declines in retirement savings, pension funds, and overall 
wealth. This was due, in part, to being pushed into abstract and 
sophisticated financial products and securities that they knew little 
or nothing about.
  I was here in 2008, Mr. Chairman. I listened to the people. I heard 
their stories. Unfortunately, for many of them, the financial crisis 
and the Great Recession caused deep and lasting harm. Many may never 
recover.
  I proudly supported the Dodd-Frank Act and believe the SEC has 
implemented many regulations that will guard against another financial 
crisis and help preserve the financial future of American families for 
generations to come. For these reasons, I am concerned the regulatory 
reviews required by the underlying bill do not properly account for 
investor protection.
  To that end, my amendment ensures the SEC does more than just 
consider how a proposed regulation will impact businesses. It expressly 
instructs the SEC to weigh the safeguards of investors when changing a 
rule or regulation. My amendment instructs the SEC to continue focusing 
on investor protection not only when drafting new rules but also when 
reviewing existing regulations. Let me be clear: it is vitally 
important that this language be included to ensure investors' needs do 
not take a backseat to industry concerns.
  We must never go back to the days leading up to the crisis, Mr. 
Chairman. By simply instructing the SEC to take into account investor 
protections when reviewing and considering new or existing regulations, 
my amendment helps ensure the safeguards we put in place under the 
Dodd-Frank Act are preserved. This will mean retirement savings and 
household wealth are more secure, and we are not once again risking 
deep and lasting harm to our economy and financial markets. For these 
reasons, I urge the adoption of my amendment.
  Mr. Chairman, I reserve the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I ask unanimous consent to claim the time 
in opposition to this amendment, though I am not opposed.
  The Acting CHAIR. Is there objection to the request of the gentleman 
from Michigan?
  There was no objection.
  The Acting CHAIR. The gentleman from Michigan is recognized for 5 
minutes.
  Mr. HUIZENGA. Mr. Chairman, I am prepared to accept the amendment and 
support its immediate passage. I want to thank the sponsor for working 
with us to draft the language that is consistent with the SEC's 
tripartite mission to: number one, protect investors; number two, 
maintain fair, orderly, and efficient markets; and, number three, 
facilitate capital formation.
  I would like to ask my colleagues to join me in supporting the 
amendment and the underlying bill.
  Mr. Chairman, I reserve the balance of my time.
  Ms. VELAZQUEZ. Mr. Chairman, I yield myself such time as I may 
consume.
  I want to thank the gentleman and Chairman Hensarling for working 
with me on this important amendment. I urge Members to vote ``yes,'' 
which is a vote to protect average, ordinary American investors.
  Mr. Chairman, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentlewoman from New York (Ms. Velazquez).
  The amendment was agreed to.


            Amendment No. 3 Offered by Mr. Al Green of Texas

  The Acting CHAIR. It is now in order to consider amendment No. 3 
printed in part A of House Report 115-3.
  Mr. AL GREEN of Texas. Mr. Chair, I have an amendment at the desk.
  The Acting CHAIR. The Clerk will designate the amendment.
  The text of the amendment is as follows:

       Page 10, line 16, strike ``and''.
       Page 10, line 20, strike the first period and all that 
     follows and insert ``; and''.
       Page 10, after line 20, insert the following:
       ``(iv) a regulation promulgated to maintain or support U.S. 
     financial stability or prevent or reduce systemic risk.''.

  The Acting CHAIR. Pursuant to House Resolution 40, the gentleman from 
Texas (Mr. Al Green) and a Member opposed each will control 5 minutes.
  The Chair recognizes the gentleman from Texas.
  Mr. AL GREEN of Texas. Mr. Chair, this amendment would exclude from 
this bill regulations that would promote financial stability and 
prevent or reduce systemic risk. I have indicated previously that we 
are concerned about the bill's unintended consequence--I don't think 
that my colleagues are doing this with malice aforethought--the 
unintended consequence of stagnating the SEC to the point that it 
cannot produce regulations that will prevent fraud. Nowhere in the bill 
does it exempt regulation that will prevent fraud.
  I believe that this will help us because the bill needs to allow the 
SEC the ability to move at the speed of innovation. These products are 
coming on the market. The best way for the SEC to be able to react to 
them efficaciously would be for the SEC to have rulemaking authority at 
the same speed of the innovation.
  I hope that we won't allow the SEC to be bogged down with a cost-
benefit analysis that is impossible to produce and that, when produced, 
will produce litigation. Again, I think this is a reasoned, thoughtful 
amendment. I trust that it will be adopted.
  Mr. Chair, I reserve the balance of my time
  Mr. HUIZENGA. Mr. Chairman, I claim the time in opposition to this 
amendment.
  The Acting CHAIR. The gentleman from Michigan is recognized for 5 
minutes.
  Mr. HUIZENGA. Mr. Chairman, I just find it a bit ironic that the 
other side is not interested in doing this cost-benefit analysis which 
is in the underlying bill here because it is too burdensome. But what 
do they want to do? They want to add more paperwork and more burden in 
their amendments.
  Despite what you have heard, the SEC is not a systemic risk 
regulator; and even the former chairman of the Committee on Financial 
Services, Barney Frank, noted at the time when the FSOC was reviewing 
asset managers for systemic designations, he recognized that these are 
not entities that pose a systemic risk to the financial system. And 
while the SEC does not regulate systemic risk, I am afraid that this 
amendment could be potentially politically misinterpreted and applied 
to a number of capital market participants and activities which they, 
frankly, have no business regulating. So it would lead to the same 
fire, aim, ready kind of situation rulemaking that we have seen from 
the current administration that hinders growth and that capital market 
formation that we have just talked about in the last amendment.
  The bill before us will ensure that future SEC rulemakings are 
prudently proposed and adopted to achieve the maximum net benefit, and 
that is what we are really talking about here today. While I support 
the underlying bill, I will have to oppose this amendment.
  Mr. Chairman, I reserve the balance of my time.

                              {time}  1545

  Mr. AL GREEN of Texas. Mr. Chairman, I would remind my friend across 
the aisle that the Volcker rule does deal with systemic risk. I would 
remind him that the SEC does play a role in regulating systemic risk.
  Having said that, let's just talk again. And I would engage in a 
colloquy with you and use my time. Explain to me how you would quantify 
a regulation designed to prevent fraud such as the fraud perpetrated by 
Madoff.
  How would you quantify it in dollars and cents? Because that is what 
you are all about, dollars and cents. How do you quantify that?
  Mr. HUIZENGA. Will the gentleman yield?
  Mr. AL GREEN of Texas. I yield to the gentleman from Michigan.

[[Page 829]]


  Mr. HUIZENGA. This has nothing to do with Bernie Madoff since the 
whistleblower approached the SEC and the SEC, using its dollars, was 
not able to stop him.
  Mr. AL GREEN of Texas. Reclaiming my time, Mr. Chairman, it does have 
to do--you are trying to divert us from the actual problem, which is 
regulations that can prevent fraud.
  How do you propose to quantify in dollars and cents regulations that 
will prevent fraud when the fraud that can be perpetrated is not 
knowable?
  I yield to the gentleman from Michigan.
  Mr. HUIZENGA. I appreciate the gentleman yielding. Working together 
on the Financial Services Committee, we know that there are actuarial 
tables and analyze risk all the time. You are able to analyze fraud.
  Mr. AL GREEN of Texas. Reclaiming my time, there is no way for anyone 
to have known.
  Mr. HUIZENGA. You are able to analyze that risk.
  Mr. AL GREEN of Texas. I reclaim my time. There is no way for anyone 
to have known what Bernie Madoff was going to do. It was not knowable. 
You are imposing a mission impossible upon the SEC.
  There is a real question that has to be answered today, Mr. Chair, or 
at some point in the future: Does Congress regulate Wall Street or does 
Wall Street regulate Congress?
  Now, this is a serious question because that is what this kind of 
regulation gives us the image of being a part of.
  Wall Street wants this. This benefits Wall Street. It doesn't benefit 
mom and pops. It doesn't benefit Main Street. It benefits 
megacorporations. And you can couch the language in any clever way that 
you want.
  In the final analysis, this is all about megacorporations being able 
to do things that would prevent--that would not be in the best interest 
of investors. Investors who are listening to this. You ought to be 
concerned. This impacts you. If this legislation passes, your 
opportunity to participate in Wall Street with regulations that are 
going to prevent fraud from being perpetrated upon you--similar to what 
Madoff perpetrated--will not be possible.
  Mr. Chairman, I reserve the balance of my time.
  The Acting CHAIR. Members are reminded to address their remarks to 
the Chair.
  The gentleman from Michigan is recognized.
  Mr. HUIZENGA. Mr. Chairman, may I inquire as to the remaining balance 
of the time.
  The Acting CHAIR. The gentleman from Michigan has 3\1/2\ minutes 
remaining, and the gentleman from Texas has 30 seconds remaining.
  Mr. HUIZENGA. At this point I am ready to close and I reserve the 
balance of my time.
  Mr. AL GREEN of Texas. Mr. Chairman, in closing, let me simply say 
this: People who are viewing this at home should become very much 
concerned about the direction that we are headed in. This is a new 
Congress and here we are currently trying to emasculate the SEC by 
putting it in a position such that it cannot produce rules to 
protecting investors; by requiring it to know the unknowable; to know 
that a rule that you are putting in place to prevent fraud has a 
quantifiable dollar amount that you can produce so that you can measure 
that against the cost of producing the rule.
  Mr. Chairman, this amendment that I propose would benefit the SEC and 
investors.
  Mr. Chair, I yield back the balance of my time.
  Mr. HUIZENGA. Mr. Chairman, I would just like to point out to all of 
my colleagues and to the American people that currently the SEC is 
under a court order to clarify how exactly they are doing their 
rulemaking. And there is a staff-level rule letter.
  With this underlying bill, we are trying to codify that. We are 
trying to make sure, not just with a letter, but by law, that they do 
what they are being ordered to do. And I will remind all of my 
colleagues and those of you out watching us, the Securities and 
Exchange Commission has a mission that has three parts.
  The first part is to protect investors. Nothing in this bill weakens 
there. Nothing in this bill takes anything away from that. We, in fact, 
underscore that.
  The second mission that it has is to maintain fair, orderly, and 
efficient markets. Emphasis again, fair, orderly, and efficient 
markets. What we are seeing is inefficiency that is being built into 
the marketplace right now, and we are here to clarify that. Let's find 
out, as the SEC is preparing a rule, what the goal and objective is and 
what is going to be the impact on it. Yes, cost is part of that, and we 
are able to look at that.
  The third thing the SEC intended to do is to facilitate capital 
formation.
  Why is that important and what exactly does that mean?
  It means making sure that there is enough money around so that 
companies, big, medium, and small, are able to go in there and get the 
cash and the credit that they need to go and expand and do the job that 
they are trying to do, which is, by the way, employ all of us in 
America.
  We have talked a lot about the underlying bill and not so much about 
the particular amendment that we have before us, but I do continue to 
oppose the amendment and encourage the passage of the underlying bill.
  Mr. Chair, I yield back the balance of my time.
  The Acting CHAIR. The question is on the amendment offered by the 
gentleman from Texas (Mr. Al Green).
  The question was taken; and the Acting Chair announced that the noes 
appeared to have it.
  Mr. AL GREEN of Texas. Mr. Chair, I demand a recorded vote.
  The Acting CHAIR. Pursuant to clause 6 of rule XVIII, further 
proceedings on the amendment offered by the gentleman from Texas will 
be postponed.
  The Acting CHAIR. The Committee will rise informally.
  The Speaker pro tempore (Mrs. Walorski) assumed the chair.

                          ____________________