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Public Statements

SEC Regulatory Accountability Act

Floor Speech

Location: Washington, DC


Mr. MARKEY. Mr. Chair, I rise today in opposition to this bill, H.R. 1062, the so-called SEC Regulatory Accountability Act.

This bill provides an extremely detailed list of factors that the Securities and Exchange Commission (SEC) will have to consider from now on in its rulemakings: every available alternative to a proposed regulation, market liquidity in the securities markets, and even whether 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).''

Yet, I notice that one phrase is missing from this list: investor protection.

Back in 1937, then SEC Chairman, and later Supreme Court Justice, William O. Douglas noted that:

We have got brokers' advocates; we have got Exchange advocates; we have got investment banker advocates; and WE are the investor's advocate.

That historically always has been the role of the SEC--to serve as the investor's advocate in our nation's securities markets. That is why Congress established the SEC, and why Congress has expanded its duties and responsibilities over the years. The goal of investor protection was similarly an animating force behind Democrats' efforts in the 111th Congress to enact the Dodd-Frank Wall Street Reform Act. Any bill that asks the SEC to look at myriad factors when developing regulations but not investor protection is off-course from the starting block. It's a bill whose compass is broken.

Yet, this is not just a bad bill. It's an unnecessary bill. Back in 1996, during the first Congress under Republican control in forty years, Democrats and Republicans came together to enact the National Securities Markets Improvement Act of 1996. This bill was authored by a conservative Republican from Texas (Rep. Fields), and supported by the then Chairman of the Committee (Mr. Bliley of Virginia). It was also supported by the Ranking Democrat of the Committee (Mr. DINGELL) and myself. As I said at the time, ``when the history of this Congress is written, there is no question that this securities overhaul and the telecommunications overhaul will be at the top of the list in terms of constructive, productive use of this Congress.'' Among the reforms in this bipartisan bill was a requirement that: ``Whenever pursuant to this title the Commission is engaged in rulemaking, or in the review of a rule of a self-regulatory organization, and is required to consider or determine whether an action is necessary or appropriate in the public interest, the Commission shall also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.''

The 1996 Act, which is current law, therefore makes sure that the SEC already is required to consider impacts on efficiency, competition and capital formation whenever it utilizes its inherent rulemaking powers to determine if an action is in the public interest.

But part of the deal that we reached back then on a bipartisan basis was that such an analysis could not be utilized to override the primary goal of the federal securities laws: investor protection. I see no reason why this House should throw out a good, bipartisan law for a clearly inferior update.

Yet, it is worth asking: given the requirements of existing law, exactly what purpose does this bill before us today actually serve?

I believe that this question has only one answer: to tie the SEC's hands and make it effectively impossible to release rules that help protect investors from depredations of rogue traders or dishonest Wall Street brokers. When Democrats in Congress enacted Dodd-Frank in 2010, we frequently included in that Act mandates that the SEC and other agencies issue various specific rules to regulate Wall Street. In many cases, Congress effectively gave the SEC a full, detailed directive for regulatory action and simply ordered the SEC to implement it. An example of this process can be found in Dodd-Frank Section 1504, which mandated in great detail how the SEC should promulgate a rule to require that companies disclose in their annual securities filings any payments they made to governments in connection with natural resource extraction projects. Notably, in many of those Dodd-Frank rules, Congress did not ask the SEC to consider the costs and benefits of a rule, because we in Congress already did so during the legislative process.

This bill makes that kind of legislating impossible. If this bill becomes law, any rulemaking mandated by Congress must receive cost benefit analysis, and if the costs are deemed by the SEC to outweigh the benefits, the rulemaking cannot be released.

And such outcomes--which should really be called agency vetoes, because they allow an agency to override a congressional mandate--are likely to happen because of the unfair playing field this bill sets up. Under this bill, the SEC will always have to consider the monetary costs to firms and liquidity, but the more amorphous dangers of not regulating--the risk of market crashes, the risk of bubbles, the risk of financial crises--are much harder to estimate. And even if the SEC does manage to get a good rule, by ordering the SEC to create an established record of why the options not taken might also be worthwhile, this bill forces the SEC to create a blueprint for Wall Street firms to fight the regulation in court. This bill will make what is already a difficult fight to protect Main Street from Wall Street even harder.

One thing is certain--this bill strongly biases the SEC against any regulation to protect investors regardless of the issue, and at a time where the American People are crying out for more regulations on Wall Street, not less. We need to ensure that the SEC continues to be the ``Investors'' Advocate.'' I therefore strongly urge my colleagues to vote no on this bill.


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