Latest posts by Jesse Hathaway (see all)
- Sanders’ ‘Stop BEZOS Act’ Boosts Government — Not Workers’ Prosperity - November 1, 2018
- There’s No Time Like the Present for Tax Reform 2.0 - September 19, 2018
- Fan Ownership, Not Stadium Welfare, Would Be Best For Sports Fans and Taxpayers - April 24, 2018
Throughout the first quarter of 2017, bureaucrats in Washington, DC issued fewer new regulations on how banks and financial institutions must do business, according to a quarterly analysis of the effects of federal government rulemaking published by Continuity, a business firm specializing in automating compliance management for financial institutions.
The Banking Compliance Index (BCI), created by Continuity every quarter, tracks the number and marginal cost of new regulations issued by federal government agencies, including the Consumer Financial Protection Bureau, Federal Deposit Insurance Corporation, Federal Reserve, National Credit Union Administration, and U.S. Department of Treasury’s Office of the Comptroller of the Currency.
According to Continuity, the pace of new regulatory excretions from Washington, DC slowed in the first quarter of 2017, reducing the amount of time needed by workers to study the new rules from 809 additional hours of paperwork in the fourth quarter of 2016 to 222 additional hours in 2017.
Likewise, the raw number of new executive agency actions affecting financial institutions dropped between January and April. In the fourth quarter of 2016, 6,000 pages of financial regulations were published, instituting 115 regulatory changes, but only 1,900 pages and 47 new regulations were published the first quarter of 2017.
Although there are a few weeks in January in which the outgoing Obama administration and incoming Trump administration overlap, Trump’s January executive order—which initially ordered most federal agencies to refrain from new rulemaking without executive approval—can be credited for the regulatory breather.
Regulations aren’t just a concern for banking compliance officers, though. According to the National Small Business Association, 44 percent of business owners report spending at least 40 hours per year dealing with federal regulatory compliance, and 40 percent of respondents say government regulations have caused them to decide not to make investments or spend capital.
Patrick McLaughlin, director of the Program for Economic Research on Regulation at George Mason University’s Mercatus Center, says government regulations caused business owners to shy away from adding a total of $4 trillion in value to the American economy between 1977 and 2012. If the number of regulations in 2012 had been the same as in 1980, the U.S. would today be about 25 percent more prosperous—equivalent to every single person having an extra $13,000 in their bank account.
Although slowing down the rulemaking process is a good start, if lawmakers want to truly unchain the U.S. economic machine, they should reduce the raw number of regulations, in addition to making fewer new rules, in order to reduce government’s role in the business planning process.
Increasing the number of regulations has a direct impact on businesses and, in turn, consumers.
By inserting itself into the operations of businesses large and small, government makes itself a factor business owners have to consider when making virtually all their decisions. Instead of being just another barrier to serving consumers, government regulators should serve as a neutral referee on the playing field, calling fouls and strikes when rules are broken, not picking winners and losers by rigging the game.
[Originally Published at the American Spectator]