Should Financial Regulators Review Current Rules More Frequently to Ensure They’re Not Outdated? (H.R. 4607)

What is H.R. 4607?

(Updated April 12, 2018)

This bill — the Comprehensive Regulatory Review Act — would expand required reviews of existing financial regulations and have them occur every 7 years, as opposed to every 10 years under current law. After carrying out the review, regulators would be required to consider tailoring regulations to limit burdens on covered businesses and individuals if regulations are found to be outdated, duplicative, unnecessary, or overly burdensome. Reviews would cover all regulated institutions, as opposed to only insured depository institutions under current law. These reviews are required by the Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) of 1996.

The Consumer Financial Protection Bureau (CFPB) and the National Credit Union Administration would assist the Federal Financial Institutions Examination Council, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation (FDIC), and the Federal Reserve Board. Currently, the CFPB doesn’t participate in reviews while the NCUA voluntarily participated in the most recent review. Findings from the CFPB’s existing 5 year reviews of regulations would be included in the EGRPRA reviews so the process isn’t duplicative and doesn’t overlap.

Argument in favor

Financial regulators should conduct more frequent and expansive reviews of existing rules to ensure that regulations aren’t outdated, duplicative, or overly burdensome — and if they are they should consider tailoring them.

Argument opposed

While it’s important for financial regulators to review rules to ensure they’re serving the public interest, this bill’s approach is too focused on relieving burdens on businesses and not focused enough on protecting consumers.

Impact

Financial institutions; and financial regulators.

Cost of H.R. 4607

The CBO estimates that enacting this bill would increase spending by $3 million over the 2018-2027 for the CFPB to hire three additional employees to conduct the required reviews and analyses.

Additional Info

In-Depth: Sponsoring Rep. Barry Loudermilk (R-GA) introduced this bill to strengthen, improve, and expand the Economic Growth and Regulatory Paperwork Reduction (EGRPRA) Act’s review process:

“In the short time I have been in Congress, one truth I have learned is that there are some bureaucrats who never saw a regulation they didn’t like, no matter how outdated, non-relevant or burdensome it may be. The Comprehensive Regulatory Review Act requires financial regulatory agencies to complete a review of their regulations every seven years and identify those regulations that are duplicative, outdated or over-burdensome. The CRRA will require these agencies to eliminate, modify or tailor unnecessary regulations every seven years, not just pencil-whip a report to Congress, as is required by the current EGRPRA laws. This bill is about rightsizing government regulators so they are more efficient, effective, and up-to-date.”

The majority of the House Democrats on the Financial Services Committee opposed this bill, offering this explanation in the committee report:

“Any comprehensive regulatory review should not be one-sided and focused on deregulating the industry, but rather seek a holistic approach to improve the overall regulatory framework to ensure it is truly working in the public’s interest. This means ensuring the review criteria is balanced, and the process encourages regulators to strengthen protections for consumer, investors, and taxpayers, not simply weaken regulations for megabanks and other large financial businesses. Unfortunately, H.R. 4607 does not provide such a balanced regulatory review approach.”

This legislation passed the House Financial Services Committee on a 38-17 vote and has the support nine bipartisan cosponsors in the House, including seven Republicans and two Democrats.

Media:

• Sponsoring Rep. Barry Loudermilk (R-GA) Press Release
  
• CBO Cost Estimate
  
• American Bankers Association (In Favor)