System Rick Council Letter on “Independent Agency Regulatory Analysis Act of 2012”

  • November 19, 2012


November 19, 2012

The Honorable Joseph Lieberman
Committee on Homeland Security and Governmental Affairs
United States Senate
340 Dirksen Senate Office Building
Washington, DC 20510

The Honorable Susan Collins
Ranking Member
Committee on Homeland Security and Governmental Affairs
United States Senate
340 Dirksen Senate Office Building
Washington, DC 20510

Dear Chairman Lieberman and Ranking Member Collins:

We are writing to thank the Committee for deciding to delay the markup of S. 3468, the “Independent Agency Regulatory Analysis Act of 2012” to allow more time to vet this proposal.   We have strong concerns about this legislation, particularly its impact on agency independence and effectiveness, and we commend you for withholding it.

While we share the goals of the bill's sponsors of bringing even greater quality and accountability to the rulemaking process, we believe subjecting independent agency rules to broad executive agency review and assessment would fundamentally change the role of independent agencies and have significant negative unintended consequences.  Any modest improvements in individual agency processes that might be achieved through this significant change would be greatly outweighed by the public costs that flow from even slower agency action, the significant potential for abuse and a substantially more politicized rulemaking process. 

Independent agencies play an essential role in protecting the taxpayer and the public in a large number of highly-evolved and complex areas of law.  Congress' original purpose in creating an independent structure was to insulate rulemakings from the control of the Executive Branch, while creating a legal apparatus that not only encourages bipartisan cooperation but is capable of quickly responding to evolving risks and providing legal continuity over time.

Moreover, in our experience as former independent agency heads, Congressional overseers, policymakers and long-time observers of the agency rulemaking process, independent agencies are already subject to considerable procedural requirements as well as congressional and judicial review.  Indeed, one of the largest challenges for independent agencies is overcoming all the existing hurdles to address problems efficiently and effectively even when those policy actions are opposed by powerful interest groups. We are concerned that subjecting independent agencies to Executive branch review would undermine these strengths and magnify the weaknesses.  Executive branch review would, at the very least, delay agency action, and at worst, provide a new avenue for powerful interest groups to use political power and procedural arguments to slow or stop independent agency rules that they oppose.

We urge you to reconsider this legislation and would welcome the opportunity to work with the Committee in the new Congress to find ways to strengthen the regulatory process.

Respectfully submitted,

The Systemic Risk Council

Chair: Sheila Bair, The Pew Charitable Trusts, Former Chair of the FDIC
Senior Advisor: Paul Volcker, Former Chair of the Federal Reserve Board of Governors


  • Brooksley Born, Former Chair of the Commodity Futures Trading Commission
  • Bill Bradley, Former United States Senator (D-NJ)
  • William Donaldson, Former Chair of the Securities and Exchange Commission
  • Harvey Goldschmid, Columbia Law School, Former Commissioner of the Securities and Exchange Commission
  • Jeremy Grantham, Co-Founder & Chief Investment Strategist, Grantham Mayo Van Otterloo (GMO)
  • Chuck Hagel, Distinguished Professor, Georgetown University, Former United States Senator (R-NE)
  • Richard Herring, The Wharton School, University of Pennsylvania
  • Hugh F. Johnston, Executive Vice President and Chief Financial Officer, PepsiCo
  • Simon Johnson, Sloan School of Management, Massachusetts Institute of Technology
  • Ira Millstein, Legal Counsel to the Systemic Risk Council, Columbia Law School Center for Global Markets and Corporate Ownership
  • Maureen O'Hara, Johnson School of Management, Cornell University
  • Paul O'Neill, Former Chief Executive Officer, Alcoa, Former Secretary of the Treasury
  • John Reed, Former Chairman and Chief Executive Officer, Citicorp and Citibank
  • John Rogers, CFA, President and Chief Executive Officer, CFA Institute
  • Alan Simpson, Former United States Senator (R-WY)
  • Chester Spatt, Tepper School of Business, Carnegie Mellon University, Former Chief Economist of the Securities and Exchange Commission

The Systemic Risk Council is an independent and non-partisan council formed by the CFA Institute and The Pew Charitable Trusts to monitor and encourage regulatory reform of U.S. capital markets focused on systemic risk.  The statements, documents and recommendations of the private sector, volunteer Council do not necessarily represent the views of the supporting organizations.  The Council works collaboratively to seek agreement on all recommendations.  This letter fairly reflects the consensus views of the Council, but does not bind individual members.