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
Putting an exact dollar figure on the cost to consumers and to
banks is difficult. …