Wednesday, April 18, 2012
SEC Chair Mary Schapiro described recent SEC efforts to improve its economic analysis in rulemaking, In her testimony before a House congressional committee on April 17. She referred to recent guidance prepared by the SEC's Risk, Strategy, and Financial Innovation Division and its Office of General Counsel (which, although news reports say it was distributed at the hearing, is not posted on the SEC's website) and provided to other Divisions and Offices to improve the process. The guidance has also been provided to the Commissioners for their input.
In her testimony Ms. Schapiro discusses the difficulties of quantifying potential economic effects, often because of lack of suitable data and the difficulties of predicting how market participants will respond to a proposed regulation.
She also discussed a recent GAO report that "appeared to conclude" that the SEC had adopted a bright-line policy not to consider the economic effects of statutorily-mandated portions of Dodd-Frank rules. While disputing that the SEC had such a policy, she noted that the new guidance states that divisions should consider the overall economic impacts, including both those attributable to Congressional mandates and those that result from an exercise of the agency's discretion.
She goes on to discuss the specific steps that are included in the new guidance. In particular, she emphasized the strengthened role that economists will play in rulemakings and that the agency expects to hire at least 20 additional economists in the near future.