There was a lot of horse trading in the healthcare bill that was passed earlier this year.  Perhaps the most egregious was the sweet deal brokered by Nebraska's Senator Ben Nelson that nearly made it into the package.  It was intended to insulate Nebraskans from some of the costs of the healthcare reforms at other taxpayers’ expense.  Fortunately, public outrage and embarrassment killed that deal when it was exposed.  Well, the same type of nonsense is going on with the current financial reform legislation that Democrats are so desperate to pass: all sorts of cats and dogs have found their way into the draft compromise bill.  These provisions are not only unrelated to the financial crisis, in some instances they also have explicit costs and unnecessarily divert agencies that will have to enforce those provisions from their primary missions.  Here are but five examples – and little need be said once they are described.

1. Creation of the Office of Minority and Women Inclusion:

Congresswoman Maxine Waters has interjected an amendment that would establish an Office of Minority and Women Inclusion in Treasury, SEC, and all the bank regulatory agencies, including the Federal Reserve Board, its new Bureau of Consumer Financial Protection, and all Federal Reserve Banks, to monitor, assess, and promote the inclusion of minorities and women in senior management and also increase participation of minority-owned and women-owned businesses in agency programs and contracts.  Additionally, the respective agencies will be charged with assessing the diversity policies of the institutions regulated by them. 

Given that we already have mandated EEO officers in virtually all firms, including government agencies, this now creates an overlapping responsibility and gets the Fed and all the other agencies deeper into EEO activities that are not central to the institutions' main missions.  In particular, it appears that despite the separation of the new Bureau of Consumer Financial Protection from the Federal Reserve Board, one reading of the bill's provision makes the Office of Minority and Women Inclusion responsible for the Bureau as well as the Board of Governors, thereby blurring further the interdependence between the two agencies.

2. Conflict Minerals:
 
This section provides a sense of Congress that certain trade in minerals mined in the civil war conflict areas of the Democratic Republic of the Congo is helping to finance the conflict, which involves sexual and gender-based violence.  The provision requires, among other things, the SEC to collect information from all institutions registered with it on the source of such minerals and the efforts taken to ensure that minerals obtained from the DRC did not originate from conflict areas, and to identify products produced that might or might not be certified as not utilizing minerals that originated in conflict areas.  In addition the section requires the State Department to create publicly available maps showing the relationship between mineral production, the location of armed groups, and a plan to promote peace in that country.

Where this section came from is anybody's guess, but we can be sure it was the price for some supporter's vote to approve the bill. 

3. Reporting Requirements Regarding Coal or Other Mine Safety:

This section requires firms in the mining business registered with the SEC to file reports of mine safety violations to the Commission.  The section details the kinds of information that is to be collected and stipulates that violations of reporting requirements will be considered an SEC violation.  This provision seems to interject the SEC into mine-safety oversight.

4. Disclosure of payments by resource extraction issuers:

In addition to the Conflict Minerals section, the SEC is also required to collect data on all payments by resource extractors and create an annual report of all payments to the US government and to foreign governments for development of oil, natural gas, or minerals, and to disclose those payments publicly.

5. Study by the Comptroller General of the effectiveness, independence, and expertise of presidentially appointed inspectors general and inspectors general of designated federal entities.

These are but a few examples of the kinds of add-ons that have crept into the financial regulatory reform legislation.  Not only are these provisions unrelated to any of the problems exposed during the financial crisis, in many cases they expand agency activities, increase the size of the organizations charged with implementing and enforcing these new initiatives, and risk diverting agency attention from their primary missions.  When agencies are charged with multiple goals and objectives, they usually have to make tradeoffs among what may be competing and even potentially conflicting goals.  For the House and Senate leaders to permit members to tack on requirements that simply pursue their own personal or political agendas and are unrelated to the main problems at hand, shows how desperate the leaders are to achieve a bill, regardless of substance or cost.