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Yesterday, Senator Richard Shelby (R-AL) introduced two Dodd-Frank bills. One bill is labeled a technical corrections bill but it includes exemptive authority for Section 953 – ie. pay versus performance and pay disparity – so that the SEC could adopt a rule exempting “small issuers” (see Section 11.3.c).

The other bill is called the “Financial Regulatory Responsibility Act of 2013” (guess “Even More JOBS Act” was already taken; Shelby introduced a similar bill in 2011). Based on a quick read (and a big hat tip to Lynn Turner for his analysis!), it appears to impose such stringent cost-benefit hurdles that I doubt any rulemaking would ever get off the ground. Remember that GAO recently reported that over half of the required rulemaking under Dodd-Frank has yet to be conducted.

Under Section 3, the bill requires a complete an extensive cost-benefit analysis – before an agency can even propose a rule! Normally, conducting a cost-benefit analysis is part of the proposal process and during that process, the agencies asks for input from the public and those affected, as to what the costs and benefits would be from the proposed rule. In addition, the bill requires agencies to compare quantified benefits with quantified costs – and if quantified costs outweigh the quantified benefits, the bill in essence stops the proposal before it is proposed. Bear in mind that the benefits of legislation often cannot be readily quantified.

The bill also requires agencies to provide all of its data & analysis to the public so that they can perform the cost-benefit analysis themselves (Section 5). And under Section 8, it makes challenges easier to bring in the US Court of Appeals for the DC District (which is the court that has been quite unfriendly to the SEC over the past decade). Plus it makes it harder for agencies to withstand such challenges (ie. if an agency is found to have not complied with this law, the rule is overturned unless the agency provides “clear and convincing evidence that vacating the rule would result in irreparable harm”). I believe this overturns decades of legal precedent about how agency rules are judicially reviewed.

The bill requires the SEC to adopt similar cost-benefit tests for agencies under its oversight, such as the PCAOB (Section 11). The bill also requires agencies to examine rules five years after adoption to see if they are achieving desired results (Section 6). A Chief Economists Council is established under Section 9.

How do you read Section 7? I believe it requires the SEC to develop a plan one year from adoption of this law – and then every five years thereafter – “to modify, streamline, expand, or repeal existing regulations so as to make the regulatory program of the agency more effective or less burdensome in achieving the regulatory objectives.” Wow! All of its laws? Not just the Dodd-Frank ones? Let me know if you read that Section differently.

Here is Senator Shelby’s press release, noting various GOP co-sponsors and the support of the Chamber of Commerce…

Personally, I like to be straight-forward and honest. If you want to stop Dodd-Frank in its tracks, do it – but don’t call it something else. But unfortunately, that is not the Congressional way. Not surprisingly, the mass media has overlooked this bill completely so far. I can only find this The Hill article, whose title infers that these bills just “tweak” Dodd-Frank.

SEC Chair Nominee Mary Jo White: Senate Confirmation Hearing Set for Tuesday

The Senate Banking Committee has set its confirmation hearing for SEC Chair Nominee Mary Jo White for next Tuesday, March 12th at 10 am. Not sure the hearing would have drawn that much attention on its own. But given that the nominee for the head of the Bureau of the Consumer Financial Protection Bureau – Richard Cordray – will also be considered at the same hearing, it could turn ugly since that new agency has been a lightning rod on the Hill. I’m sure that Senator Shelby’s bill will be mentioned…

33% Early Bird Discount Expires on Friday: Our Pair of Popular Executive Pay Conferences

Last chance to take advantage of the 33% early bird discount for our popular conferences – “Tackling Your 2014 Compensation Disclosures: The Proxy Disclosure Conference” & “Say-on-Pay Workshop: 10th Annual Executive Compensation Conference” – to be held September 23-24th in Washington DC and via Live Nationwide Video Webcast. Here are the agendas for the Conferences.

Early Bird Rates – Act by This Friday, March 8th: Act now for the early bird discount rate (both of the Conferences are bundled together with a single price). So register by end of this Friday to take advantage of the 33% discount.

– Broc Romanek