Improving U.S. Financial Regulation through OIRA Review and Robust Regulatory Analysis Standards

The United States’ financial services industry is regulated on the federal level almost entirely by independent regulatory agencies. As a result, major federal financial regulators are not subject to a number of regulatory best practices applicable to executive agencies, including (1) regulatory analysis standards set forth by executive orders and Office of Management and Budget (OMB) Circular A-4 and (2) the review of proposed regulatory actions by the Office of Information and Regulatory Affairs (OIRA). This article explores why and how insufficient regulatory analysis and a lack of OIRA review for federal financial markets rulemakings results in a regulatory process that is inadequately coordinated and thorough relative to that which exists at executive agencies. It then addresses concerns that robust regulatory analysis standards and OIRA review will unnecessarily slow the rulemaking process and are inappropriate for federal financial regulators, before concluding that Congress should statutorily require major federal financial regulators to conduct robust ex ante regulatory analyses for most proposed regulatory actions as part of the rulemaking process. Furthermore, these agencies’ rulemakings should generally be subject to statutorily required OIRA review. Together, these process reforms would improve inter-agency coordination, mitigate regulatory capture, and heighten the quality of federal financial regulation.