The report “Counting Regulations: An Overview of Rulemaking, Types of Federal Regulations, and Pages in the Federal Register” by the Congressional Research Service (Nov. 26, 2014) is the latest official pronouncement of an already well-known phenomenon—the unrelenting pace of new regulation. According to the report, our federal agencies have generated at least 3,500 final rules per year in the last 10 years, representing over 20,000 pages per year in the Federal Register.
Politicians like to focus on numbers, as well as on the administrative cost of compliance, when they talk about overregulation. But of equal importance is the hidden cost of regulation, which manifests itself in the form of unintended consequences arising from misdirected incentives. For example, regulators have tried to protect consumers from predatory lending practices mostly through the prescriptive regulation of usury, first by targeting banks, and then non-banks such as payday and auto title lenders. Unfortunately, these efforts have suppressed neither subprime borrower appetite for alternative credit, nor the ingenuity of lenders to arbitrage or game the rules to create even newer ways to satisfy the demand.
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