The FINANCIAL -- The U.S. Chamber of Commerce’s Center for Capital Markets
Competitiveness (CCMC) released a report titled, “The Importance
of Cost-Benefit Analysis in Financial Regulation,” which finds that
while regulators sometimes fail to use cost-benefit analyses
appropriately, financial regulation grounded in rigorous, transparent,
analytical standards is not only more efficient and effective, but is
required by law.
“Regulators must follow the law. A rigorous cost-benefit analysis, grounded in facts, is essential to ensure that rules actually work by maximizing the benefits for investors and promoting fair and efficient markets,” said David Hirschmann, president and CEO of CCMC. “Without understanding how a regulation will work in the real world, regulators can’t be certain it will produce the desired benefit. Instead of checking a box after the ink is already dry on a proposed rule, financial regulators should use cost-benefit analyses as a tool to enhance final regulations that ultimately strengthen our capital markets.”
As U.S. Chamber of Commerce said, the report, commissioned by the Chamber and authored by Paul Rose and Christopher Walker, both law professors at The Ohio State University Moritz College of Law and fellows at Law and Capital Markets Ohio State, recommends that all financial regulators should use a broader and wider application of cost-benefit analyses to better protect consumers and investors while promoting more efficient markets.
“Financial regulators, especially in the context of Dodd-Frank, can and should ground their rulemaking in robust cost-benefit analysis in order to arrive at more rational decision-making and efficient regulatory action as well as to promote good governance and democratic accountability,” wrote Rose and Walker in the report. “The SEC’s experience with cost-benefit analysis, both in court and also in practice, provides an important lesson for other financial regulators.”
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.