Regulation makes things Expensive 26


The government is doing what they always do – working hard to pass laws. And you know what? For the most part those laws are motivated by the right things and address serious issues. Take the latest round of compliance laws as an example.

In the mortgage industry we’ve seen the dangers of under-regulation. Companies think they can take on tremendous risk and then pass it along to the consumer/taxpayer. It worked wonderfully until the entire system came crashing down.

So now the government has stepped in to do the right thing. Compliance laws are becoming ever tougher and the banks are struggling to catch up. Compliance isn’t easy but protecting the consumer is worth it.

Just as an added layer of complexity, each state has its own variations on the laws coming down from the Consumer Financial Protection Bureau. They’re going with the guilty until proven innocent approach. Banks are inspected extremely tightly until the regulators are convinced they meet all requirements.

I think this is going to work out well for everyone involved. If there’s a tendency to slide a little to one side you need to push back a lot harder to get things to right themselves. Let’s see how the markets continue to react and find out how well Washington policy-makers have done their job.

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