A House Republican has filed legislation that would require financial regulators to review, and possibly scrub, guidance with a significant economic impact. H.R.4232, the Financial Guidance Review Act, is sponsored by Rep. Alex Mooney of West Virginia.
The measure is the latest in a broader push by critics of agencies’ prolific use of guidance, which they argue creates a complex, confusing body of regulations that exist outside the safeguards of the Administrative Procedure Act (APA). Those critics include SEC Commissioner Hester Peirce, who two years ago attacked what she called a “secret garden” of no-action letters and other guidance issued by the market regulator. (See Commissioner Peirce Attacks ‘Secret Garden’ of No-Action Letters, Guidance in the April 9, 2019, edition of Accounting & Compliance Alert.)
Under Mooney’s bill, filed June 29, 2021, financial regulators would need to annually review the prior year’s guidance to determine which guidance could have economic impact of $100 million or more, and then revoke that guidance. That review would need to take place within the first half of the year, and the results would need to be included in a report to Congress.
“No guidance should have substantial economic effects, and guidance should not be used as an end-around the normal rulemaking process,” Mooney said in a statement. “This bill strengthens congressional oversight of regulators to ensure that guidance is used to clarify regulation, not further increase regulatory burdens.”
The Financial Guidance Review Act is cosponsored by Rep. Blaine Luetkemeyer, a Missouri Republican who in 2019 filed the Guidance Clarity Act, which would require federal agency guidance documents to carry a statement spelling out that the guidance is not legally binding. (See Under GOP Bill, Guidance Documents Would Carry ‘Not Legally Binding’ Statement in the December 2, 2019, edition of ACA.)
This article originally appeared in the July 8, 2021 edition of Accounting & Compliance Alert, available on Checkpoint.
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