A comparative analysis of the US and EU retail banking markets - Wsbi

In addition, for regulations defined as “major rules” 127 ,
the Order requires the preparation of a more detailed
Regulatory Impact Assessment (RIA), which must
include an assessment of the potential costs and
benefits of the proposed regulation as well as of
potential alternatives. This RIA must be transmitted
to the Office of Management of the Budget (OMB) and
approved by it before the regulation can take effect.
Executive Order 12866 also imposes other obligations,
notably in the area of “planning management”; for
example, all regulatory agencies must prepare and
submit to the OMB annual plans, in order to improve
the coordination of the Administration’s regulatory
programme.
The Congressional Review Act (CRA) of 1996 is also
important in this context. It allows Congress 60 days
to review and possibly reject new rules developed by
regulatory agencies. More precisely, the CRA requires
the regulatory agencies to submit all new rules to
each House of the Congress, together with the
relevant information, such as a copy of the costbenefit
analysis, if any. In addition, for each major
rule, the Comptroller General shall provide a report
to the committees of jurisdiction in each House of
the Congress.
The CRA foresees a “Congressional disapproval
procedure”, which states that the Congress can issue
a ‘joint resolution’, as a consequence of which the
rule “shall have no force or effect”. Since entering
into effect in 1996, the disapproval procedure
was used once, in October 2001, in relation to the
“final regulations on ergonomics” created by the
Occupational Health and Safety Administration
(OHSA).
4.2.1.1.3 Specific features of the financial
services area
A distinctive feature of the US regulatory system in
the financial area is that it is based on a functional
division of the tasks between the different bodies in
charge of regulation in that area, meaning that
financial products and activities are generally regulated
according to their function.
Broker-dealer activities, for instance, are generally
under the jurisdiction of the Securities and Exchange
Commission, whether the broker-dealer is a subsidiary
of a bank holding company subject to Federal Reserve
supervision or a subsidiary of an investment bank.
The regulation and supervision of the financial
services sector is divided into three main areas:
banking, securities and insurance. Each of the three
areas has followed a specific evolution, which explains
why they are organised so differently, as will be
explained in the following sections.
4.2.1.2 Legislative process in
the European Union
4.2.1.2.1 Key features
The main objective set by the Treaty establishing
the European Community is the establishment of an
internal market, characterised by the abolition of
obstacles to the free movement of goods, persons,
services and capital between Member States.
The achievement of these four fundamental
freedoms constitutes the corner stone of the internal
market. However, neither the Treaty establishing
the European Community nor the Treaty on the
European Union confer on the Community and its
institutions any general power to take all measures
necessary to achieve the objectives of the Treaty,
but rather lay down in each chapter the extent of
the powers to act (principle of conferred powers).
With regard to the distribution of powers in the
European Union, it should be noted that the EU has
exclusive powers in certain fields, while in others,
such as in the financial services area, as explained
below, the powers are shared between the Union
and the Member States. In addition, the European
Union has further powers to legislate and take
measures which are indispensable for the effective
and meaningful implementation of powers that have
already been expressly conferred on it (doctrine of
implied powers). Finally, there still exist areas where
the Member States remain sovereign and directly
responsible and no powers are conferred to the
Community institutions 128 .
127 Section 3(f) of Executive Order 12866 provides a definition of “significant regulatory action”: “"Significant regulatory action" means any regulatory action
that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity,
competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive order.”
128 In these areas, the Union shall have competence to carry out supporting, coordinating or complementary action. These areas include culture, civil protection
or administrative cooperation.
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