Sometimes it takes a tragedy to make things happen. Those of us in financial services are working overtime to try and help our clients survive the most volatile market conditions of our lives, but what we’re going through is nothing compared to the stress on health care professionals, first responders, delivery personnel and anyone who deals with the public.
On a federal level, the Department of Health and Human Services is using the emergency to waive numerous restrictions that might have slowed down health care solutions. And as the worldwide economy struggles, in addition to working on aid and stimulus bills in Congress, the government is now giving banks more leeway to modify loan terms by deferring payments, reducing interest rates on outstanding loans or extending repayment periods, without having to label those situations as “troubled debt restructurings.”
I’ve long been a proponent of the idea that the best thing that government can do for business is to get out of the way. The economic record shows that regardless of who has been in the White House, when government cuts regulations, good things happen.
That’s not to say that government should completely throw out the rule book because when there are absolutely no restraints on business, the public is likely to suffer. But the best way to protect the public in most instances is not additional regulation. We’ve got more regulations than we need. What we don’t have is enough oversight.
And even when there is oversight, it doesn’t seem to be applied equally. The firms with the deepest pockets can afford to hire clever lawyers to exploit loopholes in the rules, while independent firms do their best to comply.
Regulation and oversight go hand-in-hand, but they’re not the same thing. And the bureaucrats in Washington and politicians in our statehouses and in Congress don’t seem to understand. Regulations strangle business, while oversight protects people, which is one of the primary functions of government.
The difference between oversight and regulation can be seen in our own industry by comparing how the Financial Industry Regulatory Authority and the the Securities and Exchange Commission approach financial services firms. FINRA is an independent, nongovernmental, self-regulatory organization (SRO) created “to safeguard the investing public against fraud and bad practices.” It oversees more than 3,700 brokerage firms and well over 600,000 registered reps. It writes the rules of behavior for broker-dealers and their reps and has the power to fine or ban those who violate its rules.