James Setterlund

ATR Signs Coalition Letter to Oppose SEC’s Obama Era Regulation

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Tuesday, February 11th, 2020, 2:52 PM PERMALINK

Americans for Tax Reform signed a coalition letter alongside other free-market organizations to encourage the Securities and Exchange Commission to abandon its plans to regulate the use of certain financial products and implement additional sales-practice rules between broker-dealers, investment advisors and their clients. The proposed rule will place onerous and unnecessary qualification requirements on American investors before they can freely purchase or sell certain securities openly traded in public markets.

The SEC plans to re-introduce a 2015 Obama era regulation that will inherently restrict investors ability to purchase a specific type of Exchange Traded Fund. Known as “geared” ETFs, these products are “leveraged”, meaning they typically offer investors the opportunity to earn two – three times the daily rate of return of a benchmark like the S&P 500. Like any investment product, they carry some form of risk, paired with the opportunity to earn higher returns. Geared ETFs have been available for investors to own for over 25 years, and are commonly purchased as short-term investments, rather than the buy and hold strategy of investing in government bonds that earn small but steady return from the interest on the bond.

If the SEC moves forward with its proposed regulation, the rule will require broker-dealers to collect detailed personal information. After the information is collected, the broker-dealer is then empowered to determine if their client or perspective client is “capable” of understanding the risks of this product. If the broker-dealers or investment advisors determine clients do not meet this arbitrary “capability” standard, clients and investors will be prohibited from purchasing these funds and denied an opportunity to own products that may help them achieve the higher rates of return they desire.

Furthermore, the recently implemented Regulation Best Interest laws already empower broker-dealers to decide what’s best for their clients, and the implementation of these proposed rules will only further burden investors. If the proposal is implemented in its current form, the SEC will have effectively placed themselves between investors and their trusted brokers or advisors allowing investors to only choose from options the government deems appropriate.

Photo Credit: arsheffield

ATR Signs Coalition Letter Urging the SEC to Pause the CAT

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Thursday, January 16th, 2020, 10:50 AM PERMALINK

Americans for Tax Reform signed a coalition letter led by Heritage Action for America encouraging the Securities and Exchange Commission to refrain from implementing the Consolidated Audit Trail.

The CAT National Market System is a database established after the 2010 “Flash Crash”, when the SEC began requiring broker-dealers, trading venues and stock exchanges to report all securities transactions and customer information to a single database this year. The CAT is a Delaware company jointly owned by broker-dealers on a co-equal basis, with the SEC, the Financial Industry Regulatory Authority, and 23 additional self-regulatory agencies having authority to access the database. The Heritage Foundation’s David Burton notes that as many as 3,000 regulatory users may be able to access the database.

ATR joined the coalition letter as we share the concerns of members of Congress, current SEC Commissioner Hester Peirce, and organizations representing private businesses and everyday investors who fear the collection of personal identifiable information leaves the CAT a ripe target for cyber theft, and does little to stamp out fraud within the financial markets.

Additionally, if the CAT is breached by nefarious actors there is little recourse for consumers in terms of who or what entity bears the financial burden of making consumers and companies whole. Without additional consideration of electronic breaches, it could be the consumer or taxpayers who are left picking up the tab.

Photo Credit: Scott S

ATR Supports Sen. Cruz Bill to End Operation Choke Point

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Tuesday, December 10th, 2019, 5:03 PM PERMALINK

Senator Ted Cruz (R-Texas) introduced his “Financial Institution Customer Protection Act of 2019,” which will protect small businesses from an unconstitutional directive similar to the 2013 Department of Justice initiative, “Operation Choke Point.” Choke Point was then administered by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency and threatened financial institutions to cut off all banking activities to legally operating businesses deemed “high risk” by these financial agencies.

From 2013 until the initiative ended in 2017, the FDIC and OCC used their enforcement authority to pressure banks not to lend to businesses in industries the agencies found unsavory. Regulators threatened to increase their oversight of banks that chose to continue financing activities with their customers in these industries. The initiative targeted short-term lenders, firearms and ammunition retailers, pawn shops, and other legally operating business, forcing many small businesses to search for unsecured access to capital or close its doors. This legislation ensures the DOJ and all financial regulators will not be able to abuse its enforcement power in an unconstitutional manner again. 

ATR thanks Senators Crapo, Kennedy, Tillis, Sasse, Inhofe, Braun, Lee, Cornyn, and Hyde-Smith for their support by co-sponsoring this bill. ATR president Grover Norquist also thanks Rep. Blaine Luetkemeyer, R-Mo., for his tireless efforts in the House of Representatives to secure the liberties of legally operating businesses and bring to light this abuse by the Obama administration.

Click here to read the full coalition letter.

Photo Credit: smcgee

ATR Opposes H.R. 4344, which would Expand SEC Bureaucratic Authority

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Monday, October 28th, 2019, 2:55 PM PERMALINK

ATR President Grover Norquist sent a letter to Speaker Nancy Pelosi (D-Cal.) and Minority Leader Kevin McCarthy (R-Cal.) expressing his strong opposition to Rep. Ben McAdams’ (D-U.T.) legislation, H.R. 4344. This legislation would overturn a unanimous Supreme Court decision and allow members of Congress to push precedent aside and allow the Securities and Exchange Commission to target businesses with little deference toward due process and allowing for pending complaints to remain dormant for over a decade.

H.R.4344 would expand the SEC’s statute of limitations for disgorgement claims from 5 years to 14 years, a new threshold that provides an avenue for greater power centralized at the Commission. In the letter, Norquist voices concern that this legislation would heighten compliance costs, costs that would be passed on to the investors saving for retirement at a time when the cost to retire comfortably continues to rise. 


The full letter can be found here and below.


The Honorable Nancy Pelosi, Speaker

US House of Representatives

H-323, The Capitol

Washington, DC 20515


The Honorable Kevin McCarthy, Minority Leader

H-204, The Capitol

US House of Representatives

Washington, DC 20515


Dear Speaker Pelosi and Minority Leader McCarthy:

I write in strong opposition to H.R. 4344, a bill to amend the Securities Exchange Act of 1934 to allow the Securities and Exchange Commission to seek and Federal courts to grant disgorgement of unjust enrichment, and for other purposes. This legislation would do little to protect investors and instead would expand the SEC’s authority. H.R. 4344 would create uncertainty within the marketplace as investors would begin operating under the assumption that future statutes of limitations established by legal precedent are movable and can be changed on a political whim. Should this legislation become law, those saving for retirement will be expected to pick up the tab for the additional regulatory burdens placed on businesses.  

In 2017, the Supreme Court agreed to hear Kokesh v. SEC, in which the question before the Court was whether the SEC has the authority to seek the repayment of funds through disgorgement after a five-year statute of limitations has expired. The Supreme Court unanimously held that “Disgorgement, as it applied in SEC enforcement proceedings, operates as a penalty under Section 2462. Accordingly, any claim for disgorgement is an SEC enforcement action must be commenced within five years of the date the claim accrued.”

Under current law, the SEC is required to bring disgorgement claims within 5 years of an alleged violation. This promotes effective deterrence and provides the SEC with more than enough time to discover violations of securities laws and file complaints in a timely manner. Anything longer would undermine the due process rights of defendants and hamper their ability to address the claims.

If H.R. 4344 were to be enacted, Congress will have effectively overturned a unanimous decision by the Supreme Court. Additionally, this bill will expand the SEC’s authority to target businesses with little deference toward due process that allows pending complaints to remain dormant for over a decade.

For these reasons, I oppose H.R. 4344 and encourage Representatives to vote against this legislation as it would restrict the due process rights of businesses and investors. I worry H.R. 4344 provides a gateway for future legislation that moves the goal posts of due process and provides even greater power to government regulators over legally operating businesses. This would be a slippery slope for the rule of law.


Grover G. Norquist
President, Americans for Tax Reform

Photo Credit: Wikimedia

ATR Op-Ed in Townhall Urges California Pension Against Private Prison Divestment

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Wednesday, October 16th, 2019, 9:26 AM PERMALINK

In his op-ed for Townhall, ATR’s Ryan Goff examined the result of politically motivated divestments from CalPERS’ portfolio, finding lost revenues exceeding $3.5 billion. As demonstrated in his piece, the state’s pension is only 70% funded and the prospect of further divestment away from private prisons — potentially renewed after the recent passage of Assembly Bill 32 banning state contracts with such prisons — only stands to exacerbate a critical problem. Read the full op-ed here.

Photo Credit: Sacramento Capitol During The Drought

ATR Submits Comments to FSOC on Nonbank SIFI Designation

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Friday, May 24th, 2019, 9:11 AM PERMALINK

Recently, Americans for Tax Reform submitted comments to the Financial Stability Oversight Council on their proposed guidance. This guidance would act as guidelines for the Council, its regulators and nonbank financial institutions to follow before the Council takes the drastic step of designating and institution as a Systemically Important Financial Institution. This designation comes with increased regulatory oversight, often times from the Federal Reserve, whose mission is to oversee banks not asset managers or insurers.

The Council was created from Dodd-Frank with the purpose of harmonizing communication and oversight between multiple federal agencies, state-based regulatory bodies and an independent insurance expert. FSOC is chaired by the Treasury Secretary and is comprised of 15 members, 10 with voting power and five serving as nonvoting members.

The Council has the ability to designate certain bank holding companies, non-bank institutions and financial market utilities as systemically important financial institutions. If a SIFI designation is made, the financial institution is subject to enhanced prudential oversight by the Federal Reserve Board.

ATR applauded the Council’s revised guidance and asked the Council to go further than guidance alone to create certainty for nonbank financial institutions. Additionally, ATR asked the Council to consider three additional suggestions for any finalized package.

  • The Council should consider the current regulations in effect for nonbank institutions and how additional regulations may affect how the nonbank operates.
  • The proposal would charge the Council to undertake a cost benefit analysis of the heightened oversight regulations associated with the SIFI designation. The analysis should also consider the indirect costs associated with designation.
  • Any final package should retain the requirement that the Council must first consult with the nonbank institution’s primary regulator throughout the designation process and allow the nonbank institution to offer its own solution for the Council to consider. This approach reserves the SIFI designation as a last resort option, similar to legislation (S. 603) proposed by Senator Rounds (R-S.D.) that ATR has previously supported.

ATR appreciates and is supportive of FSOC’s initiative to create certainty for nonbank financial institutions, something that was missing during the previous administration as they sought to first capture and punish rather than work to prevent future harm through due process and working with institutions to enhance their best practices. Click here to view the comments.

Photo Credit: Patrick Rasenberg

ATR Launches Shareholder Advocacy Forum to Counter Rise of Corporate Activists

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Friday, May 17th, 2019, 2:08 PM PERMALINK

Americans for Tax Reform today launched the Shareholder Advocacy Forum, a project to preserve the long-term interests of shareholders and counter the rise of activist shareholder proposals that often force a company into a stance on an unrelated social policy. The Shareholder Advocacy Forum’s goal is to protect all shareholders’ interests and to maximize their return on investment, including pension fund beneficiaries and small shareholders who rely on the continued growth of these investments for their retirement planning.

SAF will also examine the role proxy advisor firms play in providing recommendations to shareholders. These supposed conflict-of-interest-free organizations have been cited as a reason for the chilling effect in the IPO market. Existing public companies have seen these firms become more activist in nature when providing recommendations and the role their recommendations have had in undermining the long-term interests of company’s shareholders. SAF plans to hold directors and executives accountable when they place the social agenda of some ahead of their fiduciary duty to all shareholders.

SAF will also be a voice at the table to provide support for legislative and regulatory proposals and serve as an educational platform to emphasize why it is important for shareholders to continue participating in the voting process. In addition, SAF will maintain that decisions of private institutions and shareholders should be respected and protected from government intrusion, including instances of shareholders supporting mergers and acquisitions.

SAF will publish recommendations on shareholder proposals, highlights from recently published research, and letters supporting and opposing legislation. James Setterlund will serve as the Executive Director of SAF.

Photo Credit: Walmart - flickr

ATR Leads Coalition of Groups to Eliminate the Office of Financial Research

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Wednesday, May 15th, 2019, 4:31 PM PERMALINK

ATR led a coalition letter supporting Senators Ted Cruz (R-Texas), Thom Tillis (R-N.C.), and Tom Cotton (R-A.R.) and Congressmen Ted Budd (R-N.C.) Alex Mooney (R-W.V.) and Warren Davidson’s (R-Ohio) legislation that would eliminate the Office of Financial Research, S. 1478 and HR 2743.

Established under Dodd-Frank, the OFR was created with the purpose of using data provided by financial institutions to examine risks to the financial markets. This data for the most part is volunteered by private financial institutions, like bank holding companies, but the alternative is OFR using its subpoena power to demand these institutions hand over the data. That alone is a cause for concern for why a “research” agency should have subpoena issuing capabilities.

OFR is also funded through fees collected from these same financial institutions providing the agency with their data. By intention, this set up avoids direct congressional oversight and allows OFR to determine almost unanimously on their own what their budget should be and go to their financial backers with their hands out as their regulator. For example, under the Obama administration’s appointed Director, OFR’s budget was $101.4 million, as opposed to $75.3 million for fiscal year 2019.

The agency is duplicative in nature as there are roughly 20 other federal agencies that conduct the same research as OFR, most notably the Department of the Treasury, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission and the Federal Reserve. The creation of OFR is another example of expanding the government to find a solution to a problem that does not exist.

The organizations who joined this coalition letter are proud to support Senator Cruz and Representatives Budd, Mooney and Davidson and their efforts to stop government intervention and protect taxpayers from future overreach.

Americans for Tax Reform led the coalition letter supporting their legislation, which can be found here and below.

Click here to see last year’s coalition letter of support for similar legislation.

May 15, 2019

Dear Senators Cruz, Tillis and Cotton and Representatives Budd, Mooney and Davidson:

On behalf of the undersigned organizations, we write to express our support for your legislation to eliminate the Office of Financial Research, a duplicative and opaque agency created from Dodd-Frank and without congressional oversight.

In 2018, Congress passed bipartisan landmark legislation addressing numerous regulatory shortcomings and agency overreach stemming from Dodd-Frank. To complement this reform effort, Congress should consider terminating the OFR. As directed under Section 153 of Dodd-Frank, its mission is to support the Financial Stability Oversight Council and its member agencies by collecting and analyzing data and risk toward financial markets. However, this objective already exists within roughly 20 other agencies, departments, bureaus and committees, most notably within the Department of the Treasury, the Federal Deposit Insurance Corporation and the Federal Reserve.

OFR’s capabilities also raise serious questions regarding data and privacy security for financial institutions forced to turn over similar information to federal agencies, often already available with the institution’s primary regulator. In order for the agency to have access to this data, Congress granted OFR sweeping authority to collect information from the companies that fund it, including regulatory agencies, using subpoena power. Concerningly, this allows OFR to gather information for any reason and with no accountability. 

OFR is funded outside the appropriations process, receiving its funding through fees collected from predominantly bank holding companies and some non-financial companies with little oversight of how the fees are spent. For fiscal year 2019, OFR’s budget was $75.3 million, compared to its budget under the previous administration of $101.4 million for fiscal year 2017.

For these reasons, we, the undersigned organizations, strongly support your legislation which would eliminate the redundancies created through the establishment of OFR and its underlying provisions produced from Dodd-Frank.


Grover Norquist

President, Americans for Tax Reform

Brent Wm. Gardner

Chief Government Affairs Officer, Americans for Prosperity

Adam Brandon

President, FreedomWorks

Matthew Kandrach

President, Consumer Action for a Strong Economy

Andrew F. Quinlan

President, Center for Freedom and Prosperity

Phil Kerpen

President, American Commitment

Pete Sepp

President, National Taxpayers Union

Tom Schatz

President, Council for Citizens Against Government Waste

Nathan Nascimento

Executive Vice President, Freedom Partners Chamber of Commerce

Steve Pociask

President, The American Consumer Institute

Iain Murray

Vice President, Competitive Enterprise Institute

Photo Credit: Mark Pouly

ATR Supports Sen. Tillis Questioning Federal Reserve Oversight Framework

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Tuesday, April 30th, 2019, 2:17 PM PERMALINK

In February, Senator Thom Tillis sent a letter to the Government Accountability Office’s Comptroller General asking for clarification on several Federal Reserve guidance letters that established the Large Institution Supervision Coordinating Committee. The letter asks GAO to determine if the guidance constitutes a “rule” and is subject to the Congressional Review Act. The LISCC guidance letters themselves carry the weight of additional Federal Reserve oversight subjecting financial institutions to compliance and enforcement. 

Senator Tillis’ letter follows in the footsteps of Senator Pat Toomey’s letter to GAO requesting the agency to determine if a Consumer Financial Protection Bureau Bulletin also constituted a rule. Known as the “Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act” Bulletin, itset out to address a common lending arrangement between auto dealerships, customers and third-party lenders. At the end of 2017, GAO determined the Bulliten, or “guidance”, was in fact a rule and is subject to the Congressional Review Act.

The CRA provides Congress 60 legislative days to use the CRA and issue a resolution that disapproves and overturns a federal agency’s rules and prevents the agency from issuing a substantially similar rule in the future. If GAO determines LISCC to be a rule, the rule is considered published in the Congressional Record, starting the 60-day clock.

Through a series of Supervision and Regulation Letters the Federal Reserve created the LISCC supervisory program to oversee large financial institutions operating domestically and abroad with multiple business operations. The Large Institution Supervision Coordinating Committee currently supervises a total of 12 banks – eight US-charted banks and four-foreign banks with significant US operations – and is overseen by four Federal Reserve Banks in which the 12 banks are geographically located.

As Senator Tillis points out:

"Though the Federal Reserve did not pursue notice and comment, the LISCC Guidance appears to be generally applicable within its intended range, prospective in nature, and designed to implement, interpret, or prescribe law or policy. The LISCC Guidance not only describes the Federal Reserve's approach to examining large institutions, but also imposes significant substantive requirements on the banking institutions subject to the guidance."

Should GAO conclude that the LISCC Guidance constitutes a rule, and the Federal        Reserve Board moves to codify existing regulatory framework, the Federal Reserve should provide transparency that includes:

  • Establishing an official rulemaking process, allowing for public notice and public comments, as well as a cost-benefit analysis for future rulemaking and SR Letters. 
  • Create a formal process that provides financial institutions with a clearly defined criteria for LISCC designation and a pathway for de-designation. 
  • The ability for institutions designated for LISCC oversight the opportunity to appeal the designation.


Click here to view the letter applauding Senator Tillis’ leadership on the issue or see below:

April 29, 2019 

The Honorable Thom Tillis United States Senate
185 Dirksen Senate Office Washington DC 20510 

Dear Senator Tillis: 

I write in support of your letter to the Government Accountability Office Comptroller Dodaro questioning whether the Federal Reserve’s Large Institution Supervision Coordinating Committee process constitutes a rule subject to the Congressional Review Act. I share your concern that the Federal Reserve has established a regulatory framework through compliance and enforcement, without allowing for public input through the appropriate rule making process. 

In 2010, the Federal Reserve created a new supervisory program to oversee large financial institutions operating domestically and abroad with multiple business operations. The Large Institution Supervision Coordinating Committee currently supervises a total of 12 banks – eight US-charted banks and four-foreign banks with significant US operations – and is overseen by four Federal Reserve Banks in which the 12 banks are geographically located.1 

Through a series of Supervision and Regulation Letters (SR 12-17, 14-08 & 15-07) referenced in your letter to Comptroller Dodaro, LISCC appears to have been established following a report2 and its recommendations conducted by former Columbia University professor David O. Beim. According to a 2017 Government Accountability Office report, the four Reserve Banks are responsible for “designating firms for supervision under the LISCC program, the Federal Reserve takes into account a number of factors, such as the size of the financial institutions, their interconnectedness, a lack of readily available substitutes for the services they provide, their complexity, and their global activities.”3 

The designation process is concerning for two reasons. First, it appears that financial institutions subject to SR Letters 12-17 and 14-84 are automatically captured by LISCC and subject to Federal Reserve enforcement. Additionally, this could capture non-bank financial institutions that have been designated as Systemically Important 

Financial Institutions by the Financial Stability Oversight Council.5 In effect, non- bank SIFI’s could be subject to all compliance costs and examinations administered by LISCC’s Operating Committee and may include the Comprehensive Capital Analysis Review6. 

For non-bank institutions to no longer be subject to any Federal Reserve oversight, including LISCC requirements, FSOC must first act to de-designate the institutions as SIFIs. For financial institutions held as large and “noncomplex,” the Federal Reserve will work on a case-by-case basis to determine if their risk profile continues to warrant LISCC designation.7 For the largest and complex financial institutions there is no formal and clearly understood process de-designation.8 

Should GAO conclude that the LISCC Guidance constitutes a rule, and the Federal Reserve Board moves to codify existing regulatory framework, the Board should consider reforms that provide transparency through the rulemaking process, allowing for public notice and public comments, as well as a cost-benefit analysis for future rulemaking and SR Letters. Transparency includes providing financial institutions with a clearly defined criteria for LISCC designation and pathway for de-designation. The rulemaking process should provide institutions designated for LISCC oversight the ability to appeal the designation. 

Senator Tillis, your concern is valid in that the Federal Reserve Board has created LISCC under its own initiative and discretion, unfairly designating institutions for stringent compliance requirements and burdens. The process for designation lacks transparency and as you correctly assert in your letter to Comptroller Dodaro, the framework for establishing LISCC appears to constitute rulemaking authority, though its creation stems from guidance carrying the full weight of enforcement and without a defined criteria available for public comment from industry stakeholders and the public found in rulemaking. I applaud your initiative and am looking forward to working with you on this issue. 


Grover G. Norquist
President, Americans for Tax Reform 



Photo Credit: Rafael Saldaña

ATR Signs Coalition Letter Reforming the CFPB’s Short-Term Loan Rule

Share on Facebook
Tweet this Story
Pin this Image

Posted by James Setterlund on Tuesday, April 30th, 2019, 1:58 PM PERMALINK

ATR recently joined a coalition letter led by the Competitive Enterprise Institute in support of the Consumer Financial Protection Bureau’s decision to rescind portions of the small-dollar loan rule, particularly the “ability to repay” requirement. 

The small-dollar loan rule was drafted by the Obama era director Richard Cordray and finalized in 2017, who sought to impose such a high regulatory burden on lenders it would have shuttered over half of the industry. This would have choked off access to millions of Americans from affordable financial products to help, in many cases, cover unexpected costs.

The “ability to repay” standard associated with the rule puts the onerous regulations on the lender to determine if a customer has enough of a funding source or income to pay back their loan. This puts the compliance burden of the lender to go through multiple records of the customer before they can receive the loan. Often times these loans are made to customers when their week is longer than what they have in their wallets and a small $50 - $100 loan will allow them to put food on their table until their next paycheck. Determining a customer’s “ability to repay” would have put many of these short-term lenders out of business and made these small loans unserviceable because the costs of compliance exceeded the loan itself. As the Wall Street Journal pointed out, it was Cordray’s plan all along to dismantle through regulation an industry he found unsavory.

Fortunately, newly confirmed Director Kathy Kraninger announced in February that a new proposal would rescind the ability-to-repay portion of the rule. 

Click here to view the letter

Photo Credit: Haydn Blackley