The only newsletter that scans and analyzes the full breadth of regulatory developments every day. Written and curated by Todd Davenport for SourceMedia.

7.5.17 - The Fourth of July, a time to celebrate stars and stripes, founding fathers, mom and apple pie, and the Declaration of Independence. Also, possibly, the Administrative Procedure Act.

A federal appeals court ruled on Monday that the Environmental Protection Agency could not simply undo, or even postpone, that which has been done, finding that its attempt to delay a regulatory rulemaking on methane was unlawful. The regulatory rulemaking process is not a much-loved one, but Monday's ruling is a reminder of the intended semi-permanence of what the process yields. Rulemaking is methodical by design and intent.

The Washington Post said in its lead that the ruling "could set back the Trump administration’s broad legal strategy for rolling back Obama-era rules." Just as the EPA can't simply roll back the methane rule by regulatory fiat, the Federal Reserve Board can't roll back the Volcker rule.

Or the Department of Labor and the fiduciary rule. Secretary of Labor Alexander Acosta has no great love for the fiduciary rule, but as he explained several weeks ago in a Wall Street Journal editorial, he is — for now — bound to implement it. He disagreed with those who characterized the process as "red tape."

The rulemaking process "is what ensures that agency heads do not act on whims, but rather only after considering the views of all Americans," he wrote. "Admittedly, this means deregulation must find its way through the thicket of law. Casting aside the thicket, however, would leave Americans vulnerable to regulatory whim."

Indeed, the appeals court noted in its Monday opinion that there are, in fact, ways to change the rules. "Agencies obviously have broad discretion to reconsider a regulation at any time," the court wrote. "To do so, however, they must comply with the Administrative Procedure Act, including its requirements for notice and comment."

This ruling does not prevent federal agencies from exercising their authority about what to enforce and how; some deregulation can be accomplished through lack of interest in regulating. But the force of that strategy lasts only as long as the tenure of the regulatory heads, and can be further eroded by private litigants pressing courts to offer remedies that regulators themselves are reluctant to provide.

Making changes stickier requires rulemaking under the APA. To deregulate, you have to regulate.

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Today’s Key Reads
DOJ's False Claims Act focus shifts to reverse mortgage servicers
American Banker - The Trump administration's Justice Department was expected to be less aggressive in its pursuit of False Claims Act cases against the mortgage industry. Instead, its focus has shifted to Federal Housing Administration-insured reverse mortgages.

Many firms clueless on how to prepare for GDPR
Information Management - Organizations are generally unsure how these new data privacy rules will impact their businesses and haven't done enough to safeguard customer information, says Spiceworks' Peter Tsai.

Morgan Stanley credited with $30M of consumer relief
National Mortgage News - Morgan Stanley received credit for $30 million of consumer relief, completing 85% of the obligations required by its February 2016 settlement with New York State.

Groups ask MSRB to broaden CUSIP exception for private placements
Bond Buyer - Market participants say MSRB should include non-bank entities.

Extra Credit

Wall Street Journal -
FSB's Carney Warns G20 Growth at Risk From Reform Fatigue
New York Times - Global growth would suffer if regulators give into "reform fatigue" and fail to complete the overhaul of the world's banking system triggered by the financial crisis, Financial Stability Board Chairman Mark Carney said on Monday. The FSB coordinates financial regulations for G20 countries meeting in Germany this week. The Wall Street Journal also covered Carney's speech in an article that focused on his remarks about success in reducing risk within the shadow-banking sector: "The toxic forms of shadow banking at the heart of the crisis no longer represent a global financial stability risk."

Inside the White House’s policy-making juggernaut
Politico - For decades, the National Economic Council has been a home for wonks who quietly helped grease the policy gears in the White House. But under director Gary Cohn, the once-staid and process-oriented NEC has become a central force in the vicious policy battles playing out in the Trump administration.

China to Hold High-Level Meeting Aimed at Streamlining Financial Regulation
Wall Street Journal - China’s leadership is set to convene a long-delayed policy meeting late next week to streamline financial regulation, as curbing risks becomes a priority for Beijing in a year of political transition.

SEC settles fraud charges against defunct for-profit college company ITT
Washington Post - The Securities and Exchange Commission has settled its fraud case against ITT Educational Services, but it continues to pursue top executives from the defunct for-profit college firm for allegedly deceiving investors.