New Openness Rules for Finance Reform

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On Friday, the New York Times reported that four agencies responsible for implementing the financial reform bill are announcing new transparency policies:

After passage of the law overhauling the nation’s financial regulations, the federal agencies responsible for writing the rules are striving for transparency to avoid the appearance of improper coziness with lobbyists, bankers and executives in the financial services industry.

After closely tracking similar policies put in place by the Treasury to oversee the stimulus and TARP programs, we’ve started looking into just what these policies will entail.

Unfortunately, details are still scant, but we’re collecting what we can about the new policies apparently being put in place by the Fed, the FDIC, the SEC, and the CFTC. They’re strongly reminiscent of the previous policies around the stimulus and TARP, where new disclosure policies were self-imposed by the Executive over particularly vulnerable or sensitive decision making processes, ostensibly to protect merit-based decision making from undue special interest influence.

In plain English, they’re posting who they meet with, so that they make honest decisions as they reform our finance system.

These policies should be a very important development, protecting important decisions, and giving us a view into who is trying to influence the reworking of our financial regulatory system.

We’ll be looking in more detail at how these policies work, and whether they’re effective as they’re developed and implemented. In the meantime, there are a few guidelines that should cover what they’re doing.

First, the reporting needs to be timely. Disclosure needs to move at the pace of influence, and reading about last quarter’s meetings enables history, not oversight.

Second, the reporting needs to be online. They should follow guidelines for openness, and encourage reuse and analysis. (To see the sort of view into lobbying that we’ve envisioned, see this mockup of a lobbying disclosure site.)

Third, the disclosures need to be substantive. They should include information like the date, names of people attending the meetings, substance of the conversation, the clients represented, and copies of materials submitted. If disclosing the meetings protects decisions, adding substance to what gets disclosed should enhance that effect.

Finally, careful thought needs to be given to what gets reported. Agencies should consider carefully whether the rules will apply to different classes of meetings, and offer clear guidance about what constitutes a reportable meeting. They should also recognize that relying on the Lobbying Disclosure Act definition of lobbyist isn’t particularly meaningful, since influence can easily find its way around the twenty percent rule.

We’ll be following this closely, since it can be another test case in how online transparency can affect a situation where concentrated interests are swarming a few very important decisions.

If you have any further suggestions for how these policies should work, please add them in the comments, or suggest any further resources to add to our research.

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