SEC critic could be next chair of influential House committee

A member of the House Financial Services Committee who has been prodding the Securities and Exchange Commission to beef up its cost-benefit analysis of a potential fiduciary-duty rule for investment advice seems inclined to run for chair of the panel in 2013 — if the GOP maintains control of the House. Rep. Scott Garrett, R-N.J., chairman of the Capital Markets Subcommittee, hasn't made a decision on whether to put his name forward to House Republican leadership, according to a spokesman. But Mr. Garrett appears ready to make the case that he would be the best person for the job despite having less seniority than several other potential candidates. “It's certainly something he's interested in, but no decision has been made and we don't expect one to be made until the end of the year,” Ben Veghte, Mr. Garrett's communications director, wrote in an e-mail today. “If he does throw his hat into the ring, Congressman Garrett would instantly jump to the head of the pack as a top-tier candidate. Not only is his knowledge base and expertise on the issues second to none, but he has a long résumé of legislative accomplishments and a track record of working across the aisle to get results.” Last week, the current panel chairman, Rep. Spencer Bachus, R-Ala., indicated to his GOP colleagues that he will not seek a waiver in 2013 from the six-year term limit that Republicans impose on committee chairmen. The term limit includes time as ranking member of a committee. National Journal first reported the story. Mr. Garrett has been pushing the SEC to justify the rules it promulgates under the Dodd-Frank financial reform law with robust cost-benefit analyses. Dodd-Frank did not mandate a fiduciary-duty regulation, but it did give the SEC the authority to move forward. In a letter to Mr. Garrett this month, SEC Chairman Mary Schapiro said that before it proposes a rule, the agency is going to collect industry data to determine the potential impact of subjecting brokers to the same advice standard — acting in a client's best interests — that advisers must now meet. Mr. Bachus has championed another issue important to investment advisers — the establishment of a self-regulatory organization for advisers. His imminent departure as chairman clouds the prospects for his draft SRO bill. Aides to Mr. Bachus have indicated that a formal bill will be introduced this spring. In the meantime, he may put out a revised draft, according to observers. The uncertainty of where it goes from there has now been exacerbated by Mr. Bachus' imminent departure as committee chairman. As he heads for the door, he may push even harder for the bill. “If anything, he is chair [for 2012] and probably will try to get some things accomplished that he wants to finish before his term ends,” said David Tittsworth, executive director of the Investment Adviser Association. Duane Thompson, president of Potomac Strategies LLC, said that Mr. Bachus won't be encumbered by his decision to hand over the committee gavel. “Spencer Bachus will not be affected by any perceived lame-duck status this year,” Mr. Thompson said. So far, his colleagues have deferred to Mr. Bachus on the SRO issue. “No one strikes me as being a clear advocate of an SRO for advisers,” Mr. Thompson said. “That could change easily.” While Republicans are looking for a new chairman, Democrats will need to find a replacement for Mr. Frank as ranking member because Mr. Frank will retire in 2013.