New rules: how financial regulation will impact business.

• Author: Headlee, Howard
• Position: Special Section Financial Update

The recently adopted Dodd-Frank "Wall Street Reform" Act will impact literally every business, every worker and every consumer in America. When you cut through the election-year spin of the politicians, you will quickly realize this bill represents more government, more regulation and higher costs. And unfortunately, the bill has very little to do with what caused the recent financial meltdown. In fact, I will make this prediction right now: The seeds of the next economic crisis are planted deep inside this new law.

Despite the fact that many experts admit that FDIC insured banks and insured credit unions had little or nothing to do with the exotic mortgages and risky securities that were at the root of the crisis, this bill will result in more than 250 new regulations aimed squarely at local banks and credit unions, the very institutions we will rely upon to restore our economic vitality.

In fact, the markets had already adjusted with or without Dodd-Frank. These toxic loans are no longer available. But once the legislative train got moving and activists realized this bill was going to pass, literally every bad idea that pro-business advocates have fought for the past 20 years was attached to it.

As a result, more than 250 new regulations will be adopted and traditional banks, credit unions and their customers will face higher costs and see fewer innovative products. Many experts speculate that the disproportionate impact of these expensive new regulations on smaller banks and credit unions could actually trigger more industry consolidation. So despite all the rhetoric being spewed from the halls of Congress about the evils of huge financial institutions that are "too big to fail" and "too big to regulate," the result of Congress' action will most likely be fewer, larger institutions.

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