The dirty little secret about how Congress works, or doesn’t, is that most of the regulations and rules coming out of Washington are not created through the legislative process, but by the outrageous number of nameless unelected bureaucrats who pick winners and losers with impunity. At least when Congress passes a law, I can see who voted for it and hold them accountable.
The reality is, today there are simply too many rules.
This summer, Supreme Court Justice Neil Gorsuch released his new book: Over Ruled: The Human Toll of Too Much Law, which illustrates this point. In the introduction Justice Gorsuch points to the explosion of rules and regulation that have grown so vast and reached so deeply into our everyday lives that it’s worth asking: In our reverence for the rule of law, have we gone too far?
Gorsuch thinks so. He explains, “There were just so many cases that came to me in which I saw ordinary Americans, just every day, regular people trying to go about their lives, not trying to hurt anybody or do anything wrong and just getting whacked, unexpectedly, by some legal rule they didn’t know about.
There are rules for where we work and rules for how we play. There are rules for where we live. Rules exist just about for every facet of our lives. Most Americans are not consciously aware of all the rules impacting them daily. Unlike laws enacted by Congress, that generally require some public notice regarding its proposal prior to existence, the complex web of federal rules and regulations usually hits unwitting Americans without any warning.
In fact, federal agencies got a boost in their bureaucratic authority in 1984 when the United States Supreme Court established the Chevron doctrine. This case, called Chevron v. Natural Resources Defense Council, created a new prececent that required courts to defer to the federal agency’s interpretation of a rule unless that interpretation was unreasonable.
Over time this deference turned into more of a rubber stamp rather than even a cursory review. Consequently, over the past 40 years, federal agencies have run Washington free from any real court intervention on their regulatory authority.
An example of one such problematic regulation is a pending rule proposal by the Federal Reserve. Innocuously called Regulation II, it involves Debit Card Interchange Fees and Routing. Whatever that means.
The rule purports to lower the maximum interchange fee that a debit card issuer can receive for a debit card transaction – in the name of protecting the consumer. But all is not as it seems. A new research paper released by the Consumer Bankers Association (CBA) suggests that this new rule (proposed to protect the consumer) will actually cause the consumer to suffer harm.
The research shows that the downside to the proposed cap on fees is that free accounts will become less common, minimum monthly balance requirements will increase, and they will be paired with new and higher monthly maintenance fees. The report adds: Consumers can expect to pay an extra $1.3 billion to $2 billion annually in bank account fees through higher monthly maintenance fees or increases to other service fees.
Today nearly 6 million American households are “unbanked” according to the FDIC. These types of changes will undoubtedly hurt working class and minority households, who already struggle to access such services the most. Creating more unbanked Americans can’t possibly be the will of Congress.
Remember Gorsuch said there were too many rules.
There’s good news. Coinciding with the release of Justice Gorsuch’s new book, the Supreme Court overturned the Chevron doctrine taking away the key authority that government agencies have used to issue mindless and often contradictory rules and regulations. Federal courts have now been given the go ahead to decide whether the agencies are acting within the statutory authority determined by Congress.
The Federal Reserve’s proposed Regulation II should move to the top of the list of items to be struck down under the new standard. Millions of Americans rely on debit cards to assist them in their day-to-day financial transactions. Any proposed rule that will make this harder – especially for lower income and minority communities – is in no way pro-consumer.
In the end, this is one rule we can do without.
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