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Schapiro says cost-benefit analyses slowing Dodd-Frank rule-writing

Mary L. Schapiro

During a House Financial Services subcommittee hearing on Wednesday, Securities and Exchange Commission Chairwoman Mary L. Schapiro said that calls for increased cost-benefit analyses have slowed down the regulator’s rule-writing ability.

“We firmly believe that cost-benefit analyses are very important,” Schapiro said during the Wednesday hearing, according to DealBook. “One reason we need more resources is that we’re hiring many more economists [to perform the analyses].”

A U.S. appeals court recently struck down an SEC proxy access rule that would have allowed investors to more easily include resolutions on shareholder ballots. The court ruled that the agency failed to perform a satisfactory cost-benefit analysis.

Schapiro told the subcommittee that while the regulator did issue new cost-benefit analysis guidelines for the proxy access rule to staff in March, the agency is unlikely to propose the same provision again.

“We don’t have the capacity to take that on at this time,” Schapiro said, DealBook reports. She added that the agency had many pending rules to write under the JOBS and Dodd-Frank acts.

Schapiro also addressed recent efforts to make rule changes to the regulation of money market funds, saying that the funds are still struggling with “structural weakness” that could make them vulnerable to runs by investors.

“Investors still don’t understand these investments,” Schapiro said, according to DealBook.

Shapiro said that the most likely proposals to be considered include a floating net asset value, in which money funds are similar to mutual funds in terms of daily portfolio calculations, or increased capital requirements that would provide fund sponsors with a backup in the event of investor withdrawal.

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