GAO Report on Agencies' Efforts to Analyze and Coordinate Their Rules (with Lofchie Comment)

In the attached report, GAO reiterates its 2011 recommendations that the federal financial regulators more fully incorporate OMB's guidance into their rulemaking policies and that FSOC work with federal financial regulators to establish formal interagency coordination policies for rulemaking.GAO examined the following:

(1) the regulatory analyses federal agencies performed for rules issued pursuant to the Dodd-Frank Act;(2) how the agencies consulted with each other in implementing the final rules to avoid duplication or conflicts; and (3) what is known about the impact of the Dodd-Frank Act rules.

GAO identified 66 final Dodd-Frank Act rules in effect between July 21, 2011, and July 23, 2012; examined the regulatory analyses for the 54 regulations that were substantive; conducted case studies on the regulatory analyses for 4 of the 19 major rules; conducted case studies on interagency coordination for 3 other rules; and developed indicators to assess the impact of the Act's systemic risk provisions and regulations.

In summary, the GAO found that the regulators should improve their cost-benefit analyses and that the regulators were making some effort to coordinate on rulemaking. Generally, the GAO did not make any finding, one way or the other, as to whether Dodd-Frank had brought any benefits to the regulatory system.

Lofchie Comment: I generally like the GAO's reports. That said, I found this report pretty disappointing (although one may take my disappointment with a grain of salt given my general opposition to Dodd-Frank). For example, the report says that the CFTC has met with non-U.S. regulators to coordinate on swaps regulation, but says nothing about the fact that many of these foreign regulators have bluntly criticized the CFTC's assertion of extra-territorial jurisdiction. Similarly, the report states that the CFTC and the SEC have had meetings to coordinate on particular rules, but says nothing about the fact that the CFTC and the SEC have adopted completely opposite approaches to the implementation of those rules, with the CFTC implementing its rules (or portions thereof) piecemeal, while the SEC intends to adopt a complete rule set. In short, on both of these important topics, I think the GAO missed the forest for the trees.

Click here to view report in full (links externally to GAO website).