WASHINGTON – Senator Chuck Grassley this week introduced legislation that would strike a section of the recently enacted financial regulation law that exempted the Securities and Exchange Commission from the Freedom of Information Act. The bipartisan legislation was introduced with Senators Patrick Leahy, Ted Kauffman and John Cornyn.
“Our bill underscores one of the many reasons why the so-called Wall Street reform law is seriously flawed. By exempting the SEC from Freedom of Information Act requirements, the new law lets Wall Street and the SEC continue to avoid scrutiny and accountability,” Grassley said. “It makes no sense that one of the federal agencies complicit in the Wall Street meltdown should be protected from the sunshine. Our legislation will help plug this glaring hole in the new financial regulation law.”
Grassley said that it’s telling that Senators from both political parties are already trying to amend the bill that was signed into law less than three weeks ago.
The bill introduced Thursday will eliminate the FOIA exemption for certain records provided to the Securities and Exchange Commission (SEC) in the Wall Street Reform and Consumer Protection Act, which was signed into law on July 21. The bill also clarifies that hedge funds and other new entities that the SEC will regulate under the Dodd-Frank law will be considered “financial institutions” for the purposes of applying FOIA Exemption 8. The bill will ensure that the SEC can treat sensitive information provided by hedge funds to the Commission in connection with the SEC’s examination and surveillance activities in the same manner as the Commission treats such information when it is provided by other financial institutions.
Grassley opposed the final version of the financial regulation bill. Grassley said that the bill’s offset used budget gimmicks and TARP dollars that were supposed to go to pay down the national debt. He also said the bill watered down provisions in the Senate passed bill to make the derivatives market more transparent, it watered down a provision that would open up the Federal Reserve to more scrutiny and accountability, and it failed to address conflicts of interest with credit rating agencies. Grassley had supported the version that was passed by the Senate.
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