Concerned business owners

It’s a small issue, but a telling one. As the Senate continues to debate financial regulation, two senators — Olympia Snowe of Maine and Mark Pryor of Arkansas — have proposed an amendment to ensure that regulators consider the effects of new rules on small businesses. Specifically, the two would require the new Consumer Financial Protection Bureau to convene a “Small Business Review Panel” to assess the effect of any new rules on small business before formally proposing them.

Such “Small Business Review Panels” were first authorized under a regulatory reform bill signed by Bill Clinton in 1996. With members representing small businesses, these panels advise regulators on the possible effects of new rules — before the rules are formally proposed. Currently, two agencies are required to use these panels: the Environmental Protection Agency and the Occupational Safety and Health Administration, which have them some 40 times over 14 years. The proposed amendment would extend their use to the CFPB as well.

These review panels are no panacea for overregulation, but are nonetheless a step in the right direction. Who could be against ensuring that small business effects are considered? Yet, the amendment has drawn a surprising amount of criticism. Review panels, they say, provide small businesses a “privileged” position in the rulemaking process, warning that it would result in weaker regulations. Instead, they are proposing a substitute which would provide for panels that would review small business impacts after rules are finalized.

In other words, regulate first, consider the consequences later. This makes no sense. A thorough consideration of the effects of government restrictions on small businesses — or on anyone — is not a privilege. Its a basic responsibility. Nor is it a problem if rules are changed because of potential harms that they may impose. The danger is not that regulators will respond to new information — but that they will not.

The Snowe-Pryor amendment, to be voted on tomorrow, will likely not get a lot of attention. It involves a small detail of regulatory procedure that rarely makes headlines. But the debate will say a lot about how Congress views regulation, and its potential effect on enterprise in America.