The Path From Spilled Milk to the Fine Print in Mortgages: View
For fans of regulatory reform and consumer protection, the White House Web site was an excellent place to be yesterday. Not only did the administration announce nifty new fuel-economy labels to help car-buyers figure out potential gasoline savings, it also released a plan for a 21st century regulatory system.
The proposed reforms show that the administration sweated the small stuff -- and mostly got it right. Thirty agencies intend to modify or scrap meddlesome rules on matters such as overlapping medical databases.
Headed for the scrapheap are a host of rules that either never should have been adopted or grew far more burdensome than expected. Medical-device approvals are being streamlined. Gasoline stations may no longer need to install costly vapor- recovery systems at the pump, now that modern vehicles have pollution-control devices. Some railroads may no longer be required to install anti-collision technology that isn’t necessary in low-traffic areas. The aggregate savings are likely to be well over $1 billion a year, the White House says.
That’s not much in a $15 trillion economy, but such changes will go a small way toward reducing business costs and encouraging job growth. Dairy operators, for instance, no longer need to use oil-spill cleanup rules when storing and transporting milk. This switch could save $1.4 billion over 10 years in equipment costs.
Consumer Financial Protection
Such winnowing helps the Obama administration assuage business executives and trade association leaders who have complained for years about the cost of unnecessary rules. Still, it was hard to read the documents without wishing that the administration would apply the same energy to pressing Congress on a far more compelling regulatory issue: consumer protection in financial markets.
At the same time the administration was preparing to roll out the document, Elizabeth Warren, who has been advising the administration on the creation of a Consumer Financial Protection Bureau, was being grilled by Congress. The CFPB, given life by the 2010 Dodd-Frank regulatory reform law, aims to provide the public with reliable information about the risks and costs of financial products, while also policing against abuses.
Bloomberg News articles have shown widespread confusion about the risks involved in such exotic instruments as "structured certificates of deposit," whose returns are tied to stock market indexes. Consumers can barely figure out the convoluted terms on bank account fees. Mortgage-disclosure forms are harder to follow than they should be.
There is room for the CFPB to help consumers and financial institutions do business together on terms that everyone understands. Even financial institutions will prosper if the right customers are buying the right products for the right reasons. The sparring over Warren shouldn’t be allowed to obscure the importance of the overall mission.
Now that the administration has ably demonstrated its ability to shape and advocate small-scale regulatory reform, and to do so while keeping the interests of business in mind, it should turn its attention to the big stuff.
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