Bill Huizenga

Mr. HUIZENGA

Mr. HUIZENGA. Mr. Chairman, at this time I yield 3 minutes to the gentleman from Illinois (Mr. Hultgren), the vice chairman of the Capital Markets Subcommittee.

Mr. HUIZENGA. Mr. Chair, I rise today in support of H.R. 78, the SEC Regulatory Accountability Act, which would improve and strengthen the SEC's rulemaking process by requiring more rigorous economic analysis. What exactly does that mean? Well, an economic analysis is quite simple, frankly. It is a systemic approach to determine the optimum use of scarce resources involving comparison of two or more alternatives to achieve a specific objective under the given assumptions and constraints. That is a whole lot of words and jumbo. But what we need to do is make a comparison, what is going to be the benefit. Economic analysis takes into account the opportunity costs of resources employed and attempts to measure, in monetary terms, the private and social costs and benefits of a project to a community, an economy, or to an individual. In its simplest terms, the SEC would have to determine the costs and benefits of proposed regulations, as well as potential alternatives to determine a best direction forward, basically ensuring that the SEC is thoroughly assessing both the need for the regulation and adequately evaluating the potential consequences, both intended and unintended, and is there a benefit. Mr. Chairman, requiring economic analysis by Federal regulators is not a partisan issue. In fact, both President Clinton and President Obama issued executive orders requiring regulators to ensure that their rules were maximizing and achieving a net benefit. H.R. 78, the SEC Regulatory Accountability Act, would ensure consistent and effective application of the SEC's economic analysis guidance by building on the bipartisan effort to strengthen economic analysis requirements, as well as require a retrospective review of existing regulations for independent agencies like the SEC. Specifically, the bill would enhance the SEC's existing economic analysis requirements by requiring the Commission to first clearly identify the nature of the problem that would be addressed before issuing a new regulation--too often, we are just shooting at a target that we don't even know is actually a target--and to prohibit the SEC from issuing a rule when it cannot make ``a reasoned determination that the benefits of the intended regulation justify the costs of the regulation.'' Additionally, H.R. 78 would require the SEC to assess the costs and the benefits of available regulatory alternatives, including the alternative of not issuing a regulation, and choose the approach that would maximize the net benefit. The SEC must also evaluate whether a proposed regulation is inconsistent or incompatible or duplicative of other Federal regulations. In testimony before the Subcommittee on Capital Markets and Government Sponsored Enterprises last year, former SEC Commissioner Dan Gallagher noted that the SEC Regulatory Accountability Act would ``promote and improve economic analysis at the SEC and make the agency even more accountable to the investing public.'' He further testified that this bill ``will help ensure the economic analysis conducted by economists is firmly entrenched in every rulemaking the SEC conducts under the Federal securities laws.''

Mr. HUIZENGA. Mr. Chair, I commend the gentlewoman from Missouri (Mrs. Wagner) for introducing this important piece of legislation, which will equip the SEC with the necessary tools to ensure that all future SEC regulations will meet these standards with the ultimate goal of achieving the SEC's statutory mission of protecting investors and facilitating capital formation. I urge my colleagues on both sides of the aisle to support this important bill.

Mr. HUIZENGA. Mr. Chairman, despite the personal attacks happening on the floor here, I am glad to see that we are making real progress. Apparently, we are making an impact here. With that, I yield 1\1/2\ minutes to the gentleman from New York (Mr. King).

Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from Arkansas (Mr. Hill), the whip of our Financial Services Committee.

Mr. HUIZENGA. I yield the gentleman an additional 30 seconds.

Mr. HUIZENGA. Mr. Chairman, may I inquire as to what is the balance of the time remaining on each side?

Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from Florida (Mr. Ross).

Mr. HUIZENGA. Mr. Chairman, I yield 1\1/2\ minutes to the gentleman from California (Mr. Royce), the chairman of the House Foreign Affairs Committee.

Mr. HUIZENGA. I yield the gentleman an additional 15 seconds.

Mr. HUIZENGA. Mr. Chairman, at this time, I do not intend to yield to the gentlewoman from New York, even though I struggle to understand how the Export-Import Bank had anything to do with what we are talking about here today. Mr. Chairman, I yield 2 minutes to the gentleman from Colorado (Mr. Tipton), a member of the Financial Services Committee.

Mr. HUIZENGA. Mr. Chairman, I yield 2 minutes to the gentleman from Georgia (Mr. Loudermilk).

Mr. HUIZENGA. Mr. Chairman, I yield myself the balance of my time. I would just like to point out to those watching on TV the earlier Democrat-sponsored hot air portion of the bill today. You heard about the Export-Import Bank. You heard about Bernie Madoff. You heard about the Dodd-Frank Act being the only answer to an economic crisis that was caused by a housing crisis which, by the way, the Dodd-Frank Act did nothing about. By the way, on the Bernie Madoff situation, the SEC ignored a whistleblower for 10 years. This bill has nothing to do with fraud, and it is not about a trial of the effectiveness or lack thereof of the SEC today. This is about a commonsense notion that we ought to actually identify the target that these rules are trying to hit and then find out if it is the right target and analyze that. What you see on the other side of the aisle is the philosophy that more is better: the more regulation that the SEC has, the more paperwork, a bigger budget with more employees. We are not sure what their effectiveness is, and we are not sure what exactly they are trying to achieve here, but all we can tell you is that more is better. Damn the costs; it doesn't matter. That is, obviously, not the intent that we have on this side of the aisle. We are trying to make sure that the proper protection of the investors is there. We are trying to make sure that the three parts of the SEC's mandate, of which one of those is capital formation and creating a robust atmosphere, are actually happening. I urge passage of the bill. Mr. Chairman, I yield back the balance of my time.

Mr. HUIZENGA. Mr. Chairman, I feel compelled to point out to my colleagues that we are not paid by the word that is put into the Federal Register. I think, once again, you are hearing this example of more is better. It doesn't matter what the words say, just let's have more of them. We already have the SEC Chairman and the Commissioners covered by both governmentwide ethics laws and regulations as well as SEC supplemental ethics regulations which apply to all SEC employees. For example, they cannot participate personally and substantially in any matter that would have direct or predictable effect on his or her financial interests or imputed financial interests in the future, as required under the code. Also, unless they are specifically authorized by the SEC's ethics counsel, they should recuse from any matter in which he or she has a ``covered relationship.'' Well, what is a covered relationship? Well, a covered relationship includes former employees, clients, and even a spouse's employer. Further, the SEC employees must report their financial holdings to the SEC's ethics counsel; and this requirement goes beyond, frankly, the governmentwide reporting requirement. Finally, the SEC Chairman or a Commissioner must not engage in any other business, employment, or vocation while in office; nor may he or she ever use the power of their office to influence their name to promote the business interests of others, as required by law. As such, I ask my colleagues to join me in opposing this amendment. Mr. Chairman, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Chairman, I will wrap up here by simply saying that the bill before us today is intending to clarify--or have the SEC, I should say, clarify what the goal and objective is of their proposed rule. Let's find out what they are trying to do, and then, more importantly, find out if it is actually effective. There might be a rule in place already somewhere else. The other side is trying to strike that provision. They are trying to say: No. No. It doesn't matter what the other hand of government is saying. We are going to just add more and more regulation added on. We need to have a clear understanding of what the objective is, what the target is, and whether it is an effective rule to get to that point. I just would encourage my colleagues to oppose the Waters-Green amendment. Mr. Chairman, I yield back the balance of my time.

Mr. HUIZENGA. Mr. Chairman, I ask unanimous consent to claim the time in opposition to this amendment, though I am not opposed.

Mr. HUIZENGA. Mr. Chairman, I am prepared to accept the amendment and support its immediate passage. I want to thank the sponsor for working with us to draft the language that is consistent with the SEC's tripartite mission to: number one, protect investors; number two, maintain fair, orderly, and efficient markets; and, number three, facilitate capital formation. I would like to ask my colleagues to join me in supporting the amendment and the underlying bill. Mr. Chairman, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Chairman, I yield back the balance of my time.

Mr. HUIZENGA. Mr. Chairman, I claim the time in opposition to this amendment.

Mr. HUIZENGA. Mr. Chairman, I just find it a bit ironic that the other side is not interested in doing this cost-benefit analysis which is in the underlying bill here because it is too burdensome. But what do they want to do? They want to add more paperwork and more burden in their amendments. Despite what you have heard, the SEC is not a systemic risk regulator; and even the former chairman of the Committee on Financial Services, Barney Frank, noted at the time when the FSOC was reviewing asset managers for systemic designations, he recognized that these are not entities that pose a systemic risk to the financial system. And while the SEC does not regulate systemic risk, I am afraid that this amendment could be potentially politically misinterpreted and applied to a number of capital market participants and activities which they, frankly, have no business regulating. So it would lead to the same fire, aim, ready kind of situation rulemaking that we have seen from the current administration that hinders growth and that capital market formation that we have just talked about in the last amendment. The bill before us will ensure that future SEC rulemakings are prudently proposed and adopted to achieve the maximum net benefit, and that is what we are really talking about here today. While I support the underlying bill, I will have to oppose this amendment. Mr. Chairman, I reserve the balance of my time.

Mr. HUIZENGA. Mr. Chairman, may I inquire as to the remaining balance of the time.

Mr. HUIZENGA. Will the gentleman yield?

Mr. HUIZENGA. This has nothing to do with Bernie Madoff since the whistleblower approached the SEC and the SEC, using its dollars, was not able to stop him.

Mr. HUIZENGA. I appreciate the gentleman yielding. Working together on the Financial Services Committee, we know that there are actuarial tables and analyze risk all the time. You are able to analyze fraud.

Mr. HUIZENGA. You are able to analyze that risk.