Regulation and Common Sense

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There is a tendency in politics for arguments about regulation to boil down to politicians on the left arguing for more regulations and politicians on the right arguing for fewer regulations. Too often what is lost in this debate is the discussion of the quality of regulations, rather than the quantity. Effective regulations are easy to understand, easy to follow, and clearly distinguish between the crooks and honest folk, but many regulations fall short in a variety of ways.

Good regulation provides a clear line as to what is or isn’t allowed. When the line gets fuzzy, it becomes easy for upstanding businesses to fall afoul of regulatory issues unintentionally. It costs a lot of time to figure out the details of a vague regulation. And in the end, it may not become clear where the line is draw until expensive fines get handed down for crossing it. As a result, many companies may choose to err on the side of caution. This turns useful, valuable services into collateral damage of unrelated regulation.

Even when the regulations are written clearly, the costs of complying with them may be high. Increased documentation and oversight may sound like a good idea, but the extra work of supervising and documenting everything doesn’t come for free. Compliance overhead increases costs for businesses and, ultimately, hurts consumers when prices go up to compensate.

These may sound like problems that only big corporations need to worry about, but they have a very real and tangible impact on our everyday lives. I have been privileged in my career to work with many community banks. Sadly, these are a dying breed these days as more and more of them fold under the weight of regulatory burdens. Some are lucky to merge with fine, upstanding regional chains, but some towns have seen the local bank replaced with a megabank. The sad irony is that these regulations were often written to rein in big banks, but wound up driving out many smaller competitors instead.

Some of our politicians talk as though the solution is to do away with regulations altogether and create a Wild West environment for business. We’re not advocating for anything so extreme. But we need to call for simple, elegant rules that can protect the public effectively without undue burden on business. We ask you to join us in promoting common sense policies and leaders.