Editor’s Note: The GAO report “Dodd-Frank Act: Agencies’ Efforts to Analyze and Coordinate Their Rules” is attached here.’
According to the regulators, most interagency coordination is informal and conducted at the staff level. GAO’s review of selected rules shows that differences between related rules may remain even when coordination occurs. According to regulators, such differences may result from differences in their jurisdictions or the markets. Finally, the Financial Stability Oversight Council (FSOC) has not yet implemented GAO’s previous recommendation to work with regulators to establish formal interagency coordination policies.
Agencies can anticipate and evaluate the consequences of their regulations through regulatory analysis, which provides a formal way of organizing evidence that can help in understanding potential effects of new regulations. Benefit-cost analysis, the primary tool used for regulatory analysis, helps to identify the regulatory alternatives with the greatest net benefits. We, along with the Office of Management and Budget (OMB) and others, have identified benefit-cost analysis as a useful tool that can inform decision making. The systematic process of determining benefits and costs helps decision makers organize and evaluate information about, and identify trade-offs among, alternatives. Because of the merits of benefit-cost analysis, many agencies are directed by statute or executive order to conduct such analysis as part of rulemaking. For example, Executive Order 12,866 (E.O. 12,866) requires executive agencies to assess anticipated costs and benefits not only of the proposed regulatory action but also of any alternatives.
Federal agencies conducted the regulatory analyses required by various federal statutes for all 54 Dodd-Frank Act regulations that we reviewed. As part of their analyses, the agencies generally considered, but typically did not quantify or monetize, the benefits and costs of these regulations. As independent regulatory agencies, the federal financial regulators are not subject to executive orders that require comprehensive benefit-cost analysis in accordance with guidance issued by OMB. While most financial regulators said that they attempt to follow OMB’s guidance in principle or spirit, we found that they did not consistently follow key elements of the guidance in their regulatory analyses.