The U.S. Chamber of Commerce announced a new proposal for overhauling the Federal Reserve’s regulation of financial companies Tuesday, as the central bank winds down its implementation of the 2010 Dodd-Frank financial reform and congressional Republicans eye changes to the law.
The chamber, the biggest group representing businesses including banks, seeks to make the Fed more transparent and accountable to the public and Congress.
At the same time, chamber officials said Tuesday, the group seeks to avoid congressional interference with the Fed’s conduct of monetary policy, a stance that puts it in conflict with some of the ideas advanced by Democrats as well as Republicans.
David Hirschmann, the head of the chamber’s Center for Capital Markets Competitiveness, told reporters at the chamber’s headquarters near the White House that business wants the Fed to implement the open-government standards and checks and balances that other federal agencies use.
“So much of what the Fed does on the regulatory side is still a black box,” Hirschmann said. The chamber has discussed its ideas with Fed officials and members of Congress, and seeks to advance them on “all fronts.”
Among other changes, the chamber seeks to subject the Fed’s regulations to a full cost-benefit analysis, a step it says is needed to judge the merits of any rule. Opponents of such analyses have argued in the past that they are meant to stall rulemaking.
Martin Regalia, the chamber’s senior vice president for economic and tax policy, said a cost-benefit analysis would help businesses even if the results are not always correct. “The process of making the estimate forces you to be consistent in making your assumptions,” he said.
Under the proposed reforms, the Fed would hold more public meetings regarding proposed rules, provide members of Congress with more notice and information regarding interactions with global regulatory bodies, and consolidate examinations with other regulators.
Also, they would require the Fed to fill the position of vice chairman of supervision. President Obama has not nominated a candidate for the position since it was created by the Dodd-Frank law. Instead, Fed governor Daniel Tarullo has acted as the de facto vice chairman for supervision.
Some of the reforms advocated by the chamber are included in a bill written by Rep. Bill Huizenga, R-Mich., which is included in a financial reform package drafted by House Financial Services Committee Chairman Jeb Hensarling, R-Texas.
The bill, however, also requires the Fed to change its communications about monetary policy, as well as some limitations on its ability to rescue failing financial firms.
Chamber officials have said they have distanced themselves from the legislation because it includes those monetary-related measures.
Hirschmann said the group would be a “full throttled advocate” for Fed monetary policy independence, whether that brings the group into conflict with lawmakers such as Sen. Rand Paul, R-Ky., on the Right, or Sen. Elizabeth Warren, D-Mass., on the Left.
