A drastic new change to long-established rulemaking practices may signal that our increasingly partisan political process is now exerting a powerful influence on proposed rules relating to the financial markets. The consequences of this shift may affect investors and the broader markets for years to come.
Background
Historically, rulemaking by the Securities and Exchange Commission and other independent regulators rarely attracted much interest outside policy circles. This was attributable in part to the fact that the legislative process was seen as the arena for playing out the political concerns that drive the substance of new statutes. Congress would hash out differences of opinion across the aisle, and then regulators would simply propound rules implementing legislative intent pursuant to a procedure clearly defined by statutes.
