Senate Republicans Push to Slow Financial Rule-Writing

Congress cut a deal to keep the lights on in Washington. But new measures in the Senate may cut the power of financial regulators to curb Wall Street risk taking.

Senate Republicans are seeking on Friday to erect potential new obstacles to financial rule-writing at agencies like the Securities and Exchange Commission and Federal Deposit Insurance Corporation. The non-binding amendments tucked into the Senate budget plan call on agencies to evaluate more carefully the economic effects of new regulation, cutting off potential shortcuts to so-called cost-benefit studies.

Lawmakers are unlikely to reconcile the Senate budget with the House’s plans, making the measures more symbolic than anything else. And it is unclear whether lawmakers will approve the Republican amendments to the Senate’s blueprint, the chamber’s first budget since 2009. The votes are part of what Washington insiders labeled “vote-o-rama” â€" dozens of amendments flying through the Senate on Friday.

The Republican author of one financial amendment â€" Senator Susan Collins of Maine â€" argues that new financial rules should tread lightly on the fragile economy. A summary of Ms. Collins’s amendment to the budget plan calls for “sensible regulatory reform.”

But consumer advocates predict a fallout for regulators, who are putting the finishing touches on dozens of new rules to rein in the derivatives market and proprietary trading.

While the new Senate measures would be non-binding, they could serve as a political warning to regulators writing rules under the Dodd-Frank Act. Already, corporate groups have sued to halt several Dodd-Frank rules, complaining that agencies failed to produce a robust cost-benefit analysis.

The latest swipe at the rules, consumer advocates say, could further deter financial reform and impede the authority of agencies that operate independent of the White House.

“The costs of the financial crisis and benefits of avoiding the next one are crystal clear. Having financial regulators jump through more hoops will only further delay the process of making Wall Street accountable to the American public,” said Amit Narang, a regulatory policy advocate at Public Citizen, a nonprofit government watchdog group.

The measures echo bills floating around Congress for months. Ms. Collins last year pushed legislation that would impose a 13-point test for rule-making and empower the White House to second-guess new regulations, a far harsher version of the amendments facing a vote on Friday. As regulators pushed back, the bill stalled.

But the Senate amendments could breathe new life into the effort â€" an alarming prospect to Mr. Narang.

“This will further delay the already glacially slow process of finally making Wall Street accountable to the American public by instituting common-sense Dodd-Frank financial reforms,” he said.