All dollars great and small about regulations this week: the Consumer Financial Protection Bureau (CFPB) theoretically made credit more available, but reality may not be so easy. Stock Exchange data cost rules, are no longer the subject of Securities and Exchange Commission (SEC) approval under Dodd-Frank, and are also no long subject to a petition for review in United States Court of Appeals for the District Court Circuit. The Office of Management and Budget (OMB) released a draft of its annual analysis of benefits and costs in rulemaking with no surprises.
Credit Cards & Income: The CFPB promulgated a final rule to remove the requirement that credit card issuers consider the applicant’s independent ability of applicants who are 21 or older to pay the prospective indebtedness, and permits issuers to consider income and assets to which such consumers have a reasonable expectation of access. Technically, the rule brings Regulation Z into closer harmony with the Truth in Lending Act as to age, but introduces a new contour to the credit risk analysis of income and assets to which such consumers have a reasonable expectation of access in its official interpretations. In effect, the final rule permits issuers to consider a wider range of “relationships” that might be accessed to collect the indebtedness, but increases complexity and risk. Whether issuers will undertake the more complicated analysis, and assume the higher risks, remains to be seen.
Dodd-Frank Divestiture: In NetCoalition v. SEC (II), the D.C. Circuit found that the Dodd-Frank Act had divested it of jurisdiction over certain actions by the SEC. In NetCoalition v. SEC (I), the court vacated and remanded an SEC order approving a New York Stock Exchange (NYSE) change to one of its market data fee rules as arbitrary and capricious because the SEC’s reasoning was deficient. During remand, Congress enacted Dodd-Frank Act and removed the requirement that the SEC approve a change in an exchange’s market data fee rules before such change became effective; now the SEC can only suspend such a rule that would otherwise be effective. That change also divested the D.C. Circuit of jurisdiction, so the court holds. Whether other avenues of judicial review remain available is a separate question to be answered, but that avenue is now closed.
Benefits, Costs, & Unfunded Mandates: OMB’s release of its 2013 Draft Report to Congress on the Benefits and Costs of Federal Regulations and Agency Compliance with the Unfunded Mandates Reform Act under the Regulatory-Right-to-Know Act came with little fanfare. The statutorily required report consistently estimates higher benefits than costs – and that is a given in the nature of the regulatory decision-making process. Perhaps no one should be surprised. The analysis is important but the caveat is telling:
It is important to emphasize that the estimates used here have significant limitations. In some cases, quantification or monetization is not feasible. When agencies have not quantified or monetized the benefits or costs of regulations, or have not quantified or monetized important effects, it is generally because of conceptual and empirical challenges, including an absence of relevant information. Many rules have benefits or costs that cannot be quantified or monetized in light of existing information, and the aggregate estimates presented here do not capture those non-monetized benefits and costs. In some cases, quantification of various effects is highly speculative.
Guesstimates sometimes matter.