As reported in today’s issue of the Wall Street Journal, JP Morgan Chase CEO James Dimon raised concerns about excessive government regulations slowing down economic growth.
You can read more on James Dimon’s response to Fed. Chairman Bernanke’s speech HERE.
I have long said that excessive bureaucracy and government red tape is a hindrance to rebuilding the economy here in the US. It’s not a cliche.
Indeed, it is quite strange that a big business CEO is agreeing with the entrepreneur and small business community on this. Typically, large and entrenched companies will favor – and even lobby for – regulations. Why? Because it keeps competition for them out. They, being large already, can bear the costs of compliance….whereas an entrepreneurial upstart cannot.
However, in the case of Dimon’s comments about Fin-Reg affecting business, all companies appear in the same boat.
Further on this point…
Several months ago, prior to President Obama’s State of the Union Address, a National Public Radio correspondent interviewed two business owners of small manufacturing concerns. One was from Ohio and one from Oregon.
I usually don’t listen to NPR, but somehow I stumbled across this (glad I did).
During the course of the interview, the correspondent (Michele Norris) asked these business owners for their take on what the Obama Administration was doing for American small business owners.
Both of the business owners were very blunt in their opinion that the federal policies currently in place were very harmful to small business.
You can read the entire transcript of this interview HERE.
I have personally witnessed the “reforms” passed in the last 2 years decimate entire industries and restrict consumer choice.
For example, the mortgage broker industry has been effectively wiped out. Mortgage brokers were vilified for their role in the subprime mortgage crisis. Onerous rules were passed requiring high amounts of regulation and compliance requirements for mortgage brokers and loan originators. National and state exams are now required.
Is this a good thing?
But I can tell you the result is that independent mortgage brokers – most of them – were forced out of business. Good and bad alike. Consumers now have less choice with their mortgages than they did before. They are forced to go to big banks for mortgages now, and thus get strong armed into “consolidating” their assets and other “helpful” requirements in order to (possibly) qualify for a loan.
Less choice is this arena is bad for consumers.
Plus, it further entrenches the big banking oligopoly… and…thus further forcibly entrenches the great chasm between local community banking (which perform most of the small business lending) and Wall Street banks. The mid-size regional banks are disappearing (many forcibly shut down by the Fed while the big banks were bailed out). The small community banks – some still quite profitable I can assure you – are marginalized.
Bottom line: the sword of regulation is not two sided – it is almost always a one-sided blade that slices through everything. The long term effects and trickle down implications are never considered. And the implications result in further burden on the small business owner and entrepreneur.