The new Republican-led House may not have enough political allies in the Senate to repeal the Dodd-Frank law in 2011, but it has lots of options to slow-walk or influence agencies that are writing new regulations required by the law.
• Hauling regulators to Capitol Hill for private meetings;
• Peppering agencies with letters and with oversight hearings, where senior regulators are plied with questions;
• Restricting specific kinds of spending or hiring by agencies;
• Calling attention to certain rules with a Congressional resolution of disapproval.
The techniques are spelled out in a Nov. 3 report prepared by the Congressional Research Service for an unidentified lawmaker. Taxpayers pay the bill for CRS reports written by specialists and lawyers within the Library of Congress, but the reports are not released to the public unless a copy — like this one — is obtained by a watchdog group such as the Center for Democracy and Technology.
Little-used procedural tool
One of the more intriguing options detailed in the report is for Republicans in either the House or Senate to tap the little-known Congressional Review Act (CRA).
The law was created in 1996 when Republicans controlled both chambers of Congress and sought to rein in the Clinton administration’s agency rulemakings. Although it has been little used, the CRA requires all federal agencies to submit their final rules to both chambers of Congress and to the Government Accountability Office before they can take effect. It also lets Congress disapprove agencies’ final rules by enacting a joint resolution of disapproval. The downside: the resolution goes to the president, who is likely to veto it to protect rules developed under his own administration. Overturning a presidential veto requires a two-thirds vote in each chamber of Congress.
“Even if the use of the CRA does not result in the disapproval of a rule, just the threat of filing a resolution of disapproval can sometimes exert pressure on agencies to modify or withdraw their rules,” the CRS report says. “Also, the expedited procedures in the Senate can provide a forum to discuss concerns about a rule.”
Discretionary items in reform law
The CRS report also helpfully lays out a table showing more than 130 Dodd-Frank provisions that permit – but do not require – agencies to issue regulations on a particular topic.
Among the items are a couple dozen related to regulating the $615 trillion derivatives market that is opposed by Republican Spencer Bachus, the presumed new chairman of the House Financial Services Committee, and by most big players on Wall Street. One provision, according to the report, says the Commodity Futures Trading Commission “may prescribe rules applicable to swap dealers and major swap participants.”
Another discretionary item, according to the CRS report, is related to the long-running battle over whether stockbrokers should put their clients’ fiduciary interests ahead of their own profits. Specifically, the report notes that the Securities and Exchange Commission “may promulgate rules to provide that the standard of conduct for all brokers, dealers, and investment advisers, when providing personalized investment advice about securities to retail customers…shall be to act in the best interest of the customer without regard to the financial or other interest of the broker, dealer, or investment adviser providing the advice.”
And the CRS report also notes that the new Consumer Financial Protection Bureau’s power to regulate mandatory arbitration is on the discretionary list. It says the new bureau “…by regulation, may prohibit or impose conditions or limitations on the use of an agreement between a covered person and a consumer for a consumer financial product or service providing for arbitration of any future dispute between the parties."