The Government Accountability Office found that improvements are necessary to avoid regulatory overlap in a recent report on efforts by regulators to coordinate their rule-making responsibilities.
“Most of the regulations have not been finalized to date, but there’s concerns among the industry that the impact of the rules, either individually or collectively, could be too great,” Nikki Clowers, a director in the GAO’s Financial Markets and Community Investment Team, said, according to Compliance Week. “There’s been a question about whether the benefits of the rules outweigh the costs.”
Industry and trade groups have used inadequate cost-benefit analysis as the reasoning behind opposition to several rule-making efforts and in a number of lawsuits. A U.S. appeals court ruled against the Securities and Exchange Commission’s proxy access rule last year, saying that it lacked an adequate cost-benefit analysis.
Many federal banking regulators, which function as independent regulatory agencies, are not subject to cost-benefit analysis requirements under guidance issued by the Office of Management and Budget, though some regulators said that they attempt to follow the OMB’s guidelines “in principle or spirit,” Compliance Week reports.
The GAO’s review of 54 Dodd-Frank-related regulations, however, revealed that regulators do not consistently adhere to OMB guidance and did not perform a cost-benefit analysis of their approach versus the alternatives.
The GAO previously recommended that regulators better incorporate OMB guidance into their rule-makings, though the Office of the Comptroller of the Currency and SEC have yet to do so. The report said that by not following the recommendation, regulators continue to miss opportunities to improve their cost-benefit analyses, according to Compliance Week.
Additionally, the report also examined efforts by regulators to prevent regulatory overlap and duplication.
“We found that the regulators coordinated on about a third of them,” Clowers said, Compliance Week reports. “Most of that coordination took place at the staff level and was informal in nature. While informal coordination is good and can be appropriate for certain circumstances, we’ve recommended that they develop formal policies for interagency coordination to ensure that the coordination takes place, that it occurs at the right time, and that the right people are in the room.”