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Monday, September 10, 2012

More Regulatory Bureaucracy: A Cure or Disease?

Circulating in Congress in the fall of 2012, a bill would “allow the White House to second-guess major rules and mandate that agencies carefully study the economic effects of new regulation. The change could, in effect, delay a number of rules for the financial industry,” according to the New York Times. "Those who support preserving the status quo where Wall Street regulates itself will find much to like in this legislation," said Amit Narang, a regulatory policy advocate at Public Citizen, a nonprofit government watchdog group. At first glance, one might add that this would depend whether the sitting U.S. president is a Republican or Democrat—though candidates of both parties do well in terms of contributions from Wall Street (as shown by the Dodd Frank Act of 2012, which does not break up banks that are too big to fail).

The issue can be said to be whether the U.S. president as the chief executive in the U.S. Government must have control over even independent agencies such as the SEC. To be charged with the enforcement of U.S. law and yet not having the right even to be consulted  by agencies as varied as the FCC, the FDIC, the SEC and the CFTC puts the chief executive in a bind—that of constitutional responsibility without the requisite authority. If the politicalization of regulations is the fear, then the presidency should be separated constitutionally from the chief executive function.
In terms of Wall Street’s interest, the proposed bill would permit the White House only to delay proposed regulations as they are subject to further explanation. This is distinct from being able to veto them. The cost to the U.S. here is not so much in terms of the regulatees having a new means to capture their regulatory bodies; rather, it is the still-more bureaucracy in terms of procedures that is particularly problematic, given how much bureaucracy is extant in the agencies themselves. It is not as though they write a regulation today and enforce it the next day.
The proposed increase in bureaucratic procedures involving the White House falls short, moreover, in terms of the constitutional role of the U.S. president as chief executive. In other words, this role can be streamlined in lieu of “at the minimum a 13-point test for rule-making. That includes finding ‘available alternatives to direct regulation,’ evaluating the ‘costs and the benefits,’ drafting ‘each rule to be simple and easy to understand’ and periodically reviewing existing rules to make agencies ‘more effective or less burdensome.’” Culturally, American society may be too comfortable with bureaucracy as a solution. Meanwhile, we miss the big (i.e., constitutional) principle.


Ben Protess, “Lawmakers Push to Increase White House Oversight of Financial Regulators,” The New York Times, September 10, 2012. http://dealbook.nytimes.com/2012/09/09/lawmakers-push-to-increase-white-house-oversight-of-financial-regulators/