After many months of campaign rhetoric and debate, it is now time for results. The new president and the Congress face an enormous challenge to rev up the nation's economic engine and release the brakes that have been holding it back.
Restarting the economy means increasing lending and getting more credit to more individuals and small businesses. That's not likely to happen, however, as long as our nation's financial institutions are discouraged from doing what they have always done best: make loans.
This isn't just a "banking" issue. Today our nation's banks and their customers face an unending barrage of new, redundant government regulations and contradictory directives. The simple fact is that the cost of this unnecessary red tape results in fewer and more expensive loans and services for consumers.
At President Clinton's economic summit in Little Rock, the focal point of discussion was a $30 billion economic stimulus package that would create jobs and get the economy moving again. While modest by Washington standards, the $30 billion price tag represents another outlay of taxpayer funds at a time when we are racking up $300 billion deficits.
That's why the president's ears perked up when American Bankers Association President Bill Brandon pointed out that an increase in total loans of only 4 percent could produce $86 billion in increased lending. Surely a sensible reform of today's regulatory straitjacket for financial institutions could supply that much needed spark while being deficit neutral.
"There is a lot of excessive . . . regulation and actually super-conservatism out there that could be eliminated simply be moving back slightly toward normal," Brandon said in Little Rock. The president understood at once. "You heard the $86 billion figure. I've just been sitting here all day thinking about this . . . The stimulus (package) is peanuts compared to bank loans."
Certainly there is a need for fundamental regulation which guarantees bank safety and soundness. The public has a right to a secure banking system. But the cumulative stack of laws, regulations, changes and updates governing today's financial institutions exceeds 200,000 pages and it's growing every day. And as consumers, we pay for it.
Most regulations start out as someone's "good idea." But once they enter the political process, they get loaded up with add ons and extras, and before you know it, one simple idea that sounded good initially becomes a 200-page "must do" regulation that all bankers across the country are expected to know to the letter and follow explicitly.
Putting an exact dollar figure on the cost to consumers and to banks is difficult. …