When the financial crisis ended in the summer of 2009, economic prognosticators were virtually unanimous in predicting a strong, sustained recovery. But Obama-era regulatory policy smothered that recovery and made it the weakest since the Great Depression.
Now, with the economy expected to slip into recession, the coming regulatory tsunami far exceeds the excesses of the post-financial-crisis period. Nowhere are the current regulatory excesses more evident than at the Securities and Exchange Commission.
The SEC’s mandate is vital but limited. Securities laws empower the commission to combat market abuses and fraud and to ensure that investors have material information to make their own investment judgments. As President Franklin D. Roosevelt explained when signing the Securities Act of 1933, “It is, of course, no insurance against errors of judgment. That is the function of no Government. It does give assurance, however, that, within the limit of its powers, the Federal Government will insist upon knowledge of the facts on which alone judgment can be based.”
But the SEC now proposes to substitute its own judgment for that of investors, corporate directors and managers. Its recent set of proposed rules, many of which go beyond any statutory remit, have little to do with preventing abuse or fostering transparency. The SEC has taken on the role of telling companies how to run themselves and investors how to invest. In the process, the SEC is eviscerating the vital barrier in our market-driven economy between the limited and legally constrained responsibilities of the public sector and the primacy of the private sector as the driver of American prosperity.
Consider the commission’s climate-change proposal, which seeks to force climate risk to the center of every public company’s boardroom and management discussions. It would push companies to populate their boards and management ranks with climate experts and focus their strategic business and financial plans away from increasing market share and profitability to plans to transition to a lower-carbon economy.
Although technically applicable only to public companies, the proposal would reach every customer and supplier in a public company’s “value chain.” Large public companies would have to collect and report their suppliers’ and customers’ greenhouse-gas emissions, forcing countless small businesses and farmers to…
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