Do industries want the notice-and-comment rules to work?

This is another comment on the Fifth Circuit decision I discussed briefly in my June 21st post on this blog.

You'll remember (I hope) that I said that the 5th circuit has (pending appeal) freed the private funds industry of a set of new SEC regulations, and that it did so on statutory grounds, not on the procedural theories that the fund associations' attorneys had also presented.

At this point I would like to say (on behalf of the industry, if I may), "Whew". They dodged a bullet that they had fired at themselves. It is lucky for the industry the court just ignored the procedural points.

Let's go back over this. A key procedural argument turns on the statutory requirements for notice-and-comment rulemaking, applicable in a vast number of agencies. They are: (1) that a notice of proposed rulemaking be posed in the Federal Register, including a description of the issues involved or the text of the proposed rule; (2) that the public has an opportunity to comment on the proposal through submission of written data, views and arguments; (3) that the agency considers these submissions, makes changes it deems appropriate, and publishes the final rule, again in the Federal Register, along with concise statements on the comments it received and how its deliberations thereof may have changed the rule (where it did)

These procedures, where they work, result in a transparent and responsible system of regulation. Yes, misguided initiatives stay misguided, and they are seldom utterly forsaken by their advocates due to devastating public comments. But they are regularly revised, and generally (as was the case here regarding private funds) the revisions are in ways that modify and contain the harm they could have done without such a proceeding.

In this case, the private funds industry was in effect complaining that the SEC had paid them too much attention in the rule-making process. The changes (mitigations) were so great that the public was not in fact given proper advance notice of the final rule.

That is a bizarre position to take. Industry associations want to be in a position to influence agency regulations (by the SEC or any of many others) in ways that mitigate the consequences of a contemplated agenda through the comment period. The difference between the original rule and the final rule is a measure of their success at doing so. Couldn’t a win on such arguments bias the SEC, in this case and hereafter, against allowing itself to be persuaded by commenters’ data, views and arguments?

Bullet dodged.

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge. We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...

Searle: The Chinese Room

John Searle has become the object of accusations of improper conduct. These accusations even have some people in the world of academic philosophy saying that instructors in that world should try to avoid teaching Searle's views. That is an odd contention, and has given rise to heated exchanges in certain corners of the blogosphere. At Leiter Reports, I encountered a comment from someone describing himself as "grad student drop out." GSDO said: " This is a side question (and not at all an attempt to answer the question BL posed): How important is John Searle's work? Are people still working on speech act theory or is that just another dead end in the history of 20th century philosophy? My impression is that his reputation is somewhat inflated from all of his speaking engagements and NYRoB reviews. The Chinese room argument is a classic, but is there much more to his work than that?" I took it upon myself to answer that on LR. But here I'll tak...

Recent Controversies Involving Nassim Taleb, Part I

I've written about Nassim Taleb on earlier occasions in this blog. I'll let you do the search yourself, dear reader, for the full background. The short answer to the question "who is Taleb?" is this: he is a 57 year old man born in Lebanon, educated in France, who has been both a hedge fund manager and a derivatives trader. He retired from active participation from the financial world sometime between 2004 and 2006, and has been a full-time writer and provocateur ever since. Taleb's writings for the general public began where one might expect -- in the field where he had made his money -- and he explained certain financial issues to a broad audiences in a very dramatic non-technical way. Since then, he has widened has fields of study, writing about just about everything, applying the intellectual tools he honed in that earlier work. As you might have gather from the above, I respect Taleb, though I have sometimes been critical of him when my own writing ab...

Jamesian Philosophy Refreshed

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