Groups urge halt to rulemaking outside pandemic response

Apr 01, 2020
Letter calls for moratorium ‘until at least 30 days after the national emergency has been lifted’

A collection of almost 50 organizations has called on US financial regulators including the SEC to stop work on new regulations outside the scope of the Covid-19 outbreak during the worst of the pandemic.

In a recent letter, the organizations urge agencies to place a moratorium on any pending, upcoming or new rulemaking that is not directly responsive to the pandemic ‘until at least 30 days after the national emergency has been lifted.’

The letter was sent to officials at the Federal Reserve, US Department of the Treasury, Consumer Financial Protection Bureau, Commodity Futures Trading Commission, Small Business Administration, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, Department of Housing and Urban Development, SEC and Office of Management and Budget.

The organizations behind the letter are members of Americans for Financial Reform (AFR), a non-partisan coalition of more than 200 civil rights, consumer, labor, business, investor, faith-based and civic and community groups set up following the financial crisis in pursuit of what it calls ‘a strong, stable and ethical financial system.’

Groups signing the March 24 letter include Better Markets, California Reinvestment Coalition, Economic Policy Institute, Greenpeace USA, National Association of Consumer Advocates and New York Housing Conference.

They want a suspension of all federal rulemaking and regulatory actions including requests for information, notices under the Paperwork Reduction Act, notices of proposed rulemaking, advance notices of proposed rulemaking, continuing development of potential regulations or issuing final rules – unless directly related to Covid-19, the health and safety of the US population or financial and economic collateral damage of the health crisis, as well as rulemaking to extend statutory or regulatory deadlines as necessary.

‘We do not know when the current emergency might end. When the emergency is lifted, there will need to be an appropriately incremental and deliberative process to resume the halted regulatory processes that recognizes that the lifting of the emergency declaration will not result in an immediate return to pre-emergency conditions and allows for meaningful public input under still-stressed conditions,’ the groups state.

‘The pursuit of any non-crisis-related rulemaking would be a misallocation of limited resources that distracts needed focus from US public health and welfare, and financial stability. This is especially crucial because the crisis means agency capacity and resources will themselves be unusually limited.’

The SEC, for one, has already offered reporting relief for certain public company filing obligations and issued guidance on companies holding virtual AGMs, among other steps designed to ease firms’ compliance burdens during the outbreak.

In a notice on how it is responding to the pandemic, the agency also notes that certain of its proposed actions have comment periods that expired in March, and that challenges associated with Covid-19 may delay the completion and submission of comment letters.

It says that the SEC historically has considered comments submitted after a comment period closes but before the adoption of a final rule or order, and it will not take final action before April 24 on five items with comment periods closing last month to give commenters additional time if needed.

‘The chairman will continue to consult with fellow commissioners and staff and may make other adjustments to the commission’s rulemaking agenda as necessary or appropriate,’ the SEC states. ‘More generally, the commission is operational and, in addition to its Covid-19-focused efforts, remains engaged on rulemakings and other matters. We encourage market participants to submit comments on pending rulemakings in the most reasonable possible timeframe and otherwise to continue to engage with us in a manner consistent with our telework posture and health and safety guidance and directives.’

An SEC spokesperson declined to comment on the AFR letter.

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