Dodd-Frank rules challenged in court over lack of economic analyses

Richard SHelbyThe financial industry is targeting regulators for lack of adequate cost-benefit analyses on Dodd-Frank rules, which they hope will be a weakness for regulators in courtrooms.

A recent lawsuit filed in federal court in the District of Columbia by the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association against the Commodity Future Trading Commission is seen as an attempt to block new rules on commodity position limits, according to Reuters.

The rule, according to the trade groups, has been poorly crafted and lacks any legitimate economic or cost benefit analysis.

“Generally speaking, regulators have historically paid lip service to cost benefit analysis” Ira Hammerman, SIFMA's senior managing director and general counsel, said, reports. “This is not sufficient, as the law requires it to be done robustly for rulemaking.”

In September, Senate Banking Committee ranking member Sen. Richard Shelby (R-Ala.) introduced the Regulatory Responsibility Act, which would require cost benefit analysis for rulemaking under Dodd-Frankm, Reuters reports.

All Republicans on the committee, but no Democrats, sponsored Shelby’s bill.

The Obama administration has vowed to resist efforts to block Dodd-Frank rules and promised to veto any effort to delay or defund the new rules, according to Reuters.

Securities and Exchange Commission Chairman Mary Schapiro told the Senate Banking Committee last week during a hearing on Dodd-Frank oversight that conducting “certain costs or benefits may be difficult to quantify or value with precision, particularly those that are indirect or intangible,” reports.

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