by Cydney Posner
Ok, she was actually much more polite than that. You might recall that, in November after the election, House Republicans sent a letter to federal agencies requesting that they not engage in any “midnight” rulemaking — adoption of new rules before the new administration is sworn in. (See this PubCo post.) And the Senate Banking Committee’s top two Republicans made a similar request of White, as reported by Bloomberg, contending that the “new administration and Congress must have an opportunity to examine each agency’s regulatory agenda and its effect on the economy before additional rules are promulgated or finalized.”
Reuters is reporting that, on Monday, SEC Chair Mary Jo White sent a letter to the Republican Senators, stressing that “it was ‘incumbent’ on the independent regulator’s canons of ethics to proceed finalizing rules. Those canons direct the SEC to ‘exhibit a spirit of firm independence’ in performing its regulatory duties ‘without fear or favor.’” According to Reuters, the letter stated that she was “‘not insensitive to the issues raised by your letter and have carefully considered what impact, if any, the election should have on the current work of the Commission….’ She added that she had confirmed that the SEC ‘historically has proceeded with its work during comparable post-election periods.’”
In reply, Reuters reports, Jeb Hensarling, Chair of the House Financial Services Committee, warned, “‘[s]uch midnight rulemaking is neither conducive to sound policy nor consistent with the principles of democratic accountability….As the clock runs down on the Obama Administration, Chair White and all other regulators who may be tempted to hastily impose another pile of complicated regulations on our economy should know that Congress will scrutinize their actions and — if appropriate — overturn them.’”
In response to a request from the two Senators, White provided a list of regulations “that she said are ‘ready for Commission consideration’ before she plans to depart the agency….” Unfortunately, however, the only proposed rules identified in the article were “a few derivatives rules mandated by the 2010 Dodd-Frank law, as well as a more controversial one that would limit how mutual funds and exchange-traded funds use derivatives to leverage returns.” Whether other Dodd-Frank mandates — such as compensation clawbacks, pay-versus-performance or hedging disclosures, all of which were proposed in 2015, but have not yet been adopted — would also be included in the pre-inauguration list remains to be seen.