U.S. Chamber Report Highlights Benefits of Cost-Benefit Analysis in Rulemaking Process
Concludes Robust Cost-Benefit Analysis Makes for Better and More Effective Regulations
WASHINGTON, D.C.—The U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) released a report today titled, “The Importance of Cost-Benefit Analysis in Financial Regulation,” which finds that while regulators sometimes fail to use cost-benefit analyses appropriately, financial regulation grounded in rigorous, transparent, analytical standards is not only more efficient and effective, but is required by law.
“Regulators must follow the law. A rigorous cost-benefit analysis, grounded in facts, is essential to ensure that rules actually work by maximizing the benefits for investors and promoting fair and efficient markets,” said David Hirschmann, president and CEO of CCMC. “Without understanding how a regulation will work in the real world, regulators can’t be certain it will produce the desired benefit. Instead of checking a box after the ink is already dry on a proposed rule, financial regulators should use cost-benefit analyses as a tool to enhance final regulations that ultimately strengthen our capital markets.”
The report, commissioned by the Chamber and authored by Paul Rose and Christopher Walker, both law professors at The Ohio State University Moritz College of Law and fellows at Law and Capital Markets @ Ohio State, recommends that all financial regulators should use a broader and wider application of cost-benefit analyses to better protect consumers and investors while promoting more efficient markets.
“Financial regulators, especially in the context of Dodd-Frank, can and should ground their rulemaking in robust cost-benefit analysis in order to arrive at more rational decision-making and efficient regulatory action as well as to promote good governance and democratic accountability,” wrote Rose and Walker in the report. “The SEC’s experience with cost-benefit analysis, both in court and also in practice, provides an important lesson for other financial regulators.”
Since its inception in 2007, the Center for Capital Markets Competitiveness has led a bipartisan effort to modernize and strengthen the outmoded regulatory systems that have governed our capital markets. The CCMC is committed to working aggressively with the administration, Congress, and global leaders to implement reforms to strengthen the economy, restore investor confidence, and ensure well-functioning capital markets.
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.
Law and Capital Markets @ Ohio State is a program of The Michael E. Moritz College of Law at The Ohio State University. The nonpartisan program aims to further the study of capital markets and corporate law, to enhance their regulation and operation.