Wasting the Ultimate Resource

I heard this afternoon from one of my fine former students. He is now working in the mortgage banking industry. After I wrote back to say that Part III of Free Our Markets is about the interventions that caused the housing boom and the financial crisis of 2008, he wrote back to say this:

I’m definitely going to have to pick it up. With the CFPB starting to ramp up their regulation this year, it will be nice to take a look into how the downward spiral began and why I now have to sit through 3-4 hours of new regulation training a week.

The CFPB is the Consumer Financial Protection Bureau, one of the new bureaucracies inflicted on the world by the Dodd-Frank Act. That “3-4 hours of new regulation training a week” caught my attention. I wrote back,

Are you really “sit[ting] through 3-4 hours of new regulation training a week”?! If so, I would love to hear more about it and blog about it.

His response:

Yes, with all of the new red tape that our friends at the CFPB have rolled out to the industry, we have been in 3-4 hours of training a week.

How’s that for a use of the precious time of creative human beings? I suppose it is going on all over the country–how many thousands of hours that could be spent on finding credit-worthy borrowers and making new loans is being wasted on compliance with the CFPB’s restrictions on the freedom to lend?

As I argue in my book, the regulators simply cannot know all they need to know to regulate in a way that does more good than harm. The CFPB is one of the many reasons why our economy is growing so slowly.

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