The House Financial Services Committee scheduled a markup for July 29, 2014 to consider six bills, including the Regulation D Study Act (H.R. 3240) (referring to Regulation D under banking law relating to deposits, not Regulation D under the Securities Act relating to private placements), the Federal Reserve Accountability and Transparency Act of 2014 (H.R. 5018) (the “Accountability Act”), and a bill to amend the Bank Holding Company Act of 1956 (H.R. 3913).
Lofchie Comment: The Accountability Act would place a variety of constraints on the Federal Reserve, including that it conduct a cost-benefit analysis of new rules and a follow-up study of the results of any rulemakings. The bill to amend the Bank Holding Company Act would not have any substantive provisions; rather, it would only amend the purpose of the BHCA to require the various banking regulators, as well as the SEC and the CFTC, to take account of “efficiency, competition, and capital formation” in promulgating new rules. In fact, the SEC is already required to take these considerations into effect. See Section 3(f) of the Securities Exchange Act.
While it may be the case that such non-substantive amendments are not very meaningful, it seems odd that the various financial regulators operate under statutory requirements that are not directed at any overarching common purpose. The absence of a common purpose is significant as the responsibilities of the various regulators have come to intrude much more upon each other following the adoption of the Dodd-Frank Act. To give an obvious example, the regulation of swap dealers and swap transactions by the CFTC has a significant impact (whether positive or negative) on competition in the swaps market and on the efficiency of hedging. It would seem reasonable that the CFTC should take these factors into account in its rulemaking, given that the SEC is required to do so. Similarly, the banking regulators have become much more active in promulgating rules that determine capital constraints under which SEC-registered broker-dealers operate; accordingly, it would also seem reasonable to require the banking regulators to take these same factors into account that the SEC is directed to consider.