Wall Street’s Secret Plan to Defeat Financial Reform

Jul 30 2012 - 8:52am

 

A Trojan Horse has left Wall Street and infiltrated the nation’s capital. It’s the innocent sounding idea that regulatory agencies like the SEC must undertake a cost-benefit analysis for every rule they write to implement financial reform. But cost-benefit analysis isn’t innocent at all. Wall Street is using it to kill reform, and their strategy is working. Today Better Markets is releasing a report exposing this attack for what it is: Wall Street’s latest attempt to destroy the system of financial regulation that Congress established under the Dodd-Frank Act to protect our markets and our economy from another financial crisis. 

Over the last few years, Wall Street lawyers and lobbyists have seized every opportunity to spread the notion that the costs of financial regulation are too high, that these costs will hurt growth and employment, and that regulatory agencies must refrain from issuing new rules unless they can pass a stringent cost-benefit analysis.   For example, the industry has been filing lawsuits against the SEC and other regulatory agencies claiming that their new rules are actually invalid because the agencies failed to conduct an adequate cost-benefit analysis.  With this tactic, Bankers and their lobbyists have brought rulemaking almost to a standstill, jeopardizing the interests of the American public and increasing the risk of another financial crisis and large-scale recession.

Better Markets has released a report entitled: “Setting the Record Straight on Cost-Benefit Analysis and Financial Reform at the SEC,” which explains why the methodology of cost-benefit analysis is neither necessary nor appropriate in the rulemaking to implement financial regulatory reform. In our report, Better Markets debunks Wall Street’s claims and shows that in reality—

  • cost-benefit analysis has never been required or intended by Congress under the securities laws;
  • its application will create insurmountable obstacles to reform; and
  • each financial regulator must instead consider the enormous benefit that all of the new rules taken together will provide: preventing another financial crisis.

The bottom line is that forcing the Trojan Horse of cost-benefit analysis upon regulators will greatly weaken if not kill financial reform.  And without financial reform, the American people will be at the mercy of the financial industry again, facing what will almost certainly be another major crisis, more taxpayer bailouts, and yet further suffering. 

-          Read the press release about the Better Markets Report on cost-benefit analysis here.

-          Read Better Markets’ 1-page fact sheet on the cost-benefit analysis Report here.

-          Read the full Report here

-          Watch Dennis Kelleher's July 30, 2012 presentation on Cost Benefit Analysis and Wall Street's attempts to undermine financial reform here.

-          Read further press coverage on Cost-Benefit analysis here in the Better Markets newsroom here.