S.1722

Floor Speech

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Mr. ROUNDS. Mr. President, I rise to speak concerning the Dodd-Frank Act, which mandates the creation of 398 new rules. These rules are still in the process of being implemented, but already we have seen capital moving from productive uses to inefficient and unproductive uses as a result of this law. The end result is that every dollar going to comply with these rules is a dollar that can't be productively invested in our economy by providing loans or mortgages to customers or purchasing machines or, for that matter, hiring new employees. For example, at a recent Senate banking committee hearing, the comptroller for Regions Bank testified to us that the bank now employs more compliance employees than actual loan officers. This is not only bad for Regions Bank, it is harmful for our entire economy.

Unfortunately, we see examples of overregulation stemming from Washington way too often. Another example of an unnecessary and redundant rule that costs businesses capital is the so-called pay ratio rule buried in section 953 of Dodd-Frank, and today I come to the Senate floor introducing legislation to repeal it, S. 1722. Pay ratio requires the Securities and Exchange Commission to promulgate a rule requiring companies to calculate the median salary of all their employees and then divide their CEO's pay by that number.

According to one prominent organization in support of this rule, the purpose of it is to ``shame companies into lowering CEO pay.'' Forcing companies to move money from productive uses toward re-creating information that is already available so they can be shamed is a poor use of financial resources. In addition, it is also redundant. CEO pay is already public. If anyone is interested in finding the salary of a CEO of a public company, that information is easily available thanks to already existing disclosures. Also, both the Bureau of Labor Statistics and private economists already track the average salary for a wide variety of jobs. If we know the salary of a company's CEO and we know what their business does, we can already calculate a company's pay ratio. In fact, labor unions and private Web sites are already making these calculations.

Unfortunately, the result of the pay ratio rule is more than just an academic exercise; according to the SEC, companies will have to spend $73 million per year to comply with this rule. And the U.S. Chamber of Commerce estimates the cost will be higher--as much as $700 million per year or more.

If we take those two numbers and split the difference, if we add them up and divide them, we get $386 million per year as an average estimate just to comply with this one single rule.

Taking a look at this rule, let's use our own pay ratio test. In 2014, the Bureau of Labor Statistics calculated that the annual mean wage was $47,230. If we divide $386 million, which is the cost of complying with the pay ratio rule, by $47,230, which is the mean annual wage for workers, we get the number 8,172. This means that on average we could pay 8,172 people their full salary for the amount of money it takes to comply with the pay ratio rule. Remember, this is only one of 398 such rules found within Dodd-Frank, a number of which have not even been implemented yet.

The money they would use to do this has to come from somewhere to pay for the new compliance systems required to follow this rule, taking away much needed capital from businesses that could otherwise invest money growing their business and creating job opportunities. It is a waste of time, effort, and money.

The legislation I introduced yesterday simply strikes this rule in Dodd-Frank. It does nothing to change any other part of the law. Repealing the pay ratio rule would allow companies to find more productive uses for their time and money so they can invest in the future and create job opportunities.

I am committed to relieving Americans from this and other unnecessary and burdensome regulations during my time in the Senate. I encourage my colleagues to join me in this effort.

Mr. President, I yield the floor.

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