Costly Regulation Takes Center Stage

The discussion over the appropriate amount of government regulation continues to heat up.  This week, the heads of both parties teed up the debate.  President Obama received a letter from House Speaker John Boehner (R-OH) calling on the President to list the rulemakings that would cost the economy more than $1 billion.  The letter was sent as House Republicans prepare to push for a roll back of many existing regulations this fall.

I am again asking that your Administration provide a list of all pending and planned rulemakings with a projected impact on our economy in excess of $1 billion.  I ask that you provide this information by the time Congress reconvenes, so that the information will be available as the House considers legislation requiring a congressional review and approval of any proposed federal government regulation that will have a significant impact on the economy as we continue our efforts to remove impediments to job creation and economic growth for the American people.

President Obama responded today.  He also used the opportunity to bolster his initiative to reduce the cost of regulatory burdens and further stake out his position:  the cost of regulations in 2009 and 2010 were lower than those implemented under President Bush in 2007 and 2008.  The specific list of seven proposed regulations that could exceed $1 billion are:

A delayed EPA rule restrictions hazardous emissions by coal- and oil-fired electric utility steam generators, at $10 billion.

• New emissions standards for emissions by major industrial and commercial boilers, $3 billion.

• Standards for disposal of coal ash from power plants, $0.6 billion to $1.5 billion.

• New vehicle safety regulations for rear view mirrors, $2 billion.

• Electronic on-board recorders and documents for supporting restrictions on the hours that commercial truck drivers can operate their vehicles, $2 billion.

• New hours of service rules for commercial truck drivers, $1 billion.

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CMC Continues its Push on the CFTC’s “Tape Recording” Rule

In our continuing effort to increase awareness of the onerous “tape recording” rule promulgated by the CFTC (see the letter for details), CMC staff is active in the process of setting up meetings with House and Senate Agriculture Committee staff on both sides of the aisle. In addition, we have discussed the issue with the CFTC and plan to meet with them in early September. Several media organizations such as Platts, Reuters, The Hill and Financial Times, among others, have been apprised of the issue and CMC’s position on it. Furthermore, we are collaborating with other trade associations in formally and informally commenting on this topic, which will help in multiplying CMC’s voice among the regulatory and legislative community.

This is another instance of Dodd-Frank Title VII rulemaking that is ill conceived and inadequately analyzed by the regulators. A thorough cost-benefit analysis, if conducted by the relevant officials, will doubtless find that the substantial costs of this proposed rule far outweigh the limited benefits that may accrue from it.

Gensler Gives Some Guidance On The Path Ahead

CFTC Chairman Gary Gensler outlined the Commission’s plans for the coming months in his opening remarks at the Conference on Commodity Markets.  Of particular note, he expects to finalize rulemakings on

  • Position Limits
  • Clearinghouse core principles
  • Business conduct
  • Entity definition
  • Trading
  • Data reporting
  • End-User exemption

Sensitive to the precedent set by Business Roundtable v. SEC decision and the recent OIG report on the CFTC’s cost-benefit analysis, Gensler noted that

“It is important to point out that each of our final rules includes a careful consideration of costs and benefits completed with the involvement of the CFTC’s Office of the Chief Economist.”

More specifically, CMC is hearing that September will include the position limits rulemaking (though it looks like October may be a more realistic timeline) as well as two proposals to phase in the compliance requirements.  The Commission will look for public comment on scheduling the compliance requirements for swap clearing & trading mandates, internal business conduct standards, and margin rules for uncleared swaps.

CMC Attends CFTC Conference On Commodity Markets

The CFTC’s Conference on Commodity Markets opened to a packed house.  The two-day event assembles an impressive panel of economists discussing their research and findings.

CMC Meets With World Federation of Exchanges

CMC met with a visiting executive from the World Federation of Exchanges this week.  Among many topics, we focused the conversation on the impact of global financial regulatory reform across the industry.

Several legislative and regulatory agenda items discussed on CMC’s policy call

On CMC’s member-only policy call this week (8/23/2011), many legislative and regulatory topics were discussed among the membership and staff. Legislative topics included the public dissemination of oil contract information by Sen. Sanders of Vermont and upcoming Title VII legislative activity in September. Regulatory topics that were discussed included CMC’s work on the “tape recording” issue and on position limits.

 

CMC Meets with IMF Executive

CMC met with a senior economist and policy analyst at the IMF whose work includes global capital and financial markets. This was a good opportunity to introduce CMC and our work to this individual and invite her to our 2012 annual meeting.