Magazine article American Banker

Ex-Regulator Sees Danger in 'One-Size-Fits-All Rules.' (Former New Jersey Bank Commissioner Geoffrey M. Connor)(banking Regulations) (Column)

Magazine article American Banker

Ex-Regulator Sees Danger in 'One-Size-Fits-All Rules.' (Former New Jersey Bank Commissioner Geoffrey M. Connor)(banking Regulations) (Column)

Article excerpt

Talking to an ex-bank commissioner brings to mind the story of the man given a choice between heaven and hell by St. Peter. He picks hell because it looks so pleasant, only to find that immediately after he makes his choice it becomes terrible.

"why the difference?" he asks.

"Ah," St. Peter replies. "Before you were a tourist. Now you are an immigrant."

I asked Geoffrey M. Connor, formerly New Jersey's bank commissioner and now a lawyer in private practice with Reed, Smith, Shaw & McClay in Princeton, N.J., how his perspective on banking has changed since he reentered the private sector a couple of months ago.

Vast Majority Are All Right

"The most significant point I would express is that regulations and legislation too often are 'one size fits all' -- applying to a whole industry when 99% of the members are not guilty. Thus the boutiques and other organizations whose operations are vastly different from those of the perpetrators, whose actions caused the new legislation, have an added burden that is expensive but meaningless in helping the public."

"What can we do about this?" I asked. "Can the various private associations monitor and control their own bad apples to keep everyone from being hurt?"

Jeff's answer: "Many are not members of the trade associations anyway, and many others don't care what the association says. I guess the best way to solve the problem of these abusers would be to have the associations publish advisory bulletins warning 'Stay away from so-and-so.'"

Common Sense

"But due process is a key to democracy, and it would be terrible to have such warnings about individual companies issued before the associations prove their own case. There is a lot people can do with common sense, though.

"If everyone else offers an 8% mortgage and someone offers you a 5% one, you have to be an idiot to think there is nothing wrong or that there's no catch in the offer being given to you. …

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