Better Markets, a nonprofit, nonpartisan group dedicated to promoting the public interest in financial reform, today called on the Office of Management and Budget (OMB) to reject a recent request to drag the agency into ongoing legal and political disputes over the Dodd-Frank financial reform law, which is designed to prevent another financial crisis and taxpayer-funded bailout.
When Congress passed the Dodd-Frank Act in 2010, it included key provisions to prevent a repeat of conflicts of interest that contributed to the financial crisis of 2008 and to ensure that corporate “chief compliance officers” have the power to stop risky behavior. Under the law, the Commodity Futures Trading Commission (CFTC) issued important new rules last week that require comprehensive reporting and transparency and eliminate conflicts of interest.
One Commissioner who voted against these important rules subsequently wrote to OMB asking for the executive agency to review the cost-benefit analysis done by the CFTC in passing the rules. Because the CFTC is an independent agency and did the proper analysis, Better Markets calls upon OMB to reject the request. In their letter to OMB, Better Markets presents the following arguments that show why OMB should reject the request, including:
- CFTC is an independent agency and thus not subject to OMB or executive branch review;
- Congress has specifically set forth the standards for cost-benefit analysis that do apply to the CFTC and the CFTC has properly applied them;
- The most critical principle of the Dodd-Frank Act is that any rule must be evaluated for its role helping to prevent another financial crisis.
“Wall Street has heavily lobbied regulators looking for loopholes to avoid tough standards. They’re often armed with self-funded, self-serving ‘studies’ that complain loudly about the potential cost to megabank profit margins. But they always ignore the guiding principle for Dodd-Frank rulemaking: making sure the American people never have to suffer from another Wall Street created financial crisis,” said Dennis Kelleher, President and CEO of Better Markets.
“Any common-sense cost-benefit analysis must weigh the cost to industry against the catastrophic cost of another financial crisis to the American people. That’s the real test. Another financial crisis could be even worse than the 2008 crisis,” Mr. Kelleher said. “There cannot be a comparison between the miniscule costs of these rules compared to the benefit of averting another financial crisis. Industry is trying to get let off the hook by claiming these necessary rules will costs them some money, but that is just their latest complaint to go back to business as usual, which caused the crisis, required bailouts for Wall Street and stuck the American taxpayer with the bill.”