The financial industry and its allies claim that regulators can’t pass any rules that cost them too much money to implement. Of course, their definition of “too much money” is very, very small. That is absurd.
Of course, regulating the industry to prevent another financial crisis is going to cost the industry money for compliance. And, it’s going to cost them some revenue, profits and bonuses because the law and the rules are meant to end or limit their risky trading and investments that threaten the financial system and risk failure and bailouts. Those costs, however, are absolutely essential to protect the American people, taxpayers and the treasury from Wall Street. The cost of the last crisis was many trillions of dollars and the worst economy since the Great Depression of the 1930s. That devastating recession continues today, hurting millions of Americans and wrecking too many communities throughout the country.
For reasons I’ve already pointed out, Wall Street doesn’t want anyone limiting their reckless activities or their access to being bailed out by taxpayers. One of the key ways they are trying to do that is to make the regulators do unrealistic and unwarranted cost-benefit analysis that exaggerates the costs to the industry and understates the benefits to the country and American people.
The latest salvo in this ongoing battle was when one Commissioner of the CFTF sent a letter to the OMB requesting it to review the CFTC’s cost benefit analysis of three recently passed rules, which that Commissioner voted against.
Such a request is highly unusual and, frankly, improper. The CFTC is an independent agency and is not subject to OMB or the Executive Branch direction or review. That is a very important principal because it enables independent agencies to do what they are supposed to do under the law with limited political interference. Every commissioner of every independent agency is duty-bound to protect that agency’s independence. Each commissioner is a mere temporary fiduciary and shouldn’t allow passing political interests to override their duty to protect their independent agency as they swore to when they took their oath of office.
Moreover, this particular commissioner is seeking to create a cost benefit analysis standard that will be virtually impossible to satisfy. Importantly, it is a standard that the CFTC isn’t even required to satisfy because it’s not in the statute. Here’s our full response to these baseless claims, demonstrating that the CFTC has the right and duty to reject the industry’s claims about costs and to protect the American people from Wall Street as the law requires.