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At best regulations act as a moat keeping competition away the entrenched banks. As soon as the government comes up with rules the smart people at the banks fin

At best regulations act as a moat keeping competition away the entrenched banks. As soon as the government comes up with rules the smart people at the banks find a way to get around it and make money. Startups don’t have the legal expertise and can’t compete.

jakelazaroff 7y ago
If that's the case, why do banks consistently push to loosen regulations? Can you point to an instance of banks lobbying for increased oversight and restrictions? Making a bank should be hard. I don't want some unknown startup to come in to "move fast and break things", because "things" in this case means "people's savings".
- camjohnson26 7y ago
  Well there’s the CEO of Bank of America saying “Dodd-Frank is fine, None of us are trying to touch it”. The big banks could push a lot harder against regulation than they do. https://www.economicclub.org/sites/default/files/MoynihanExcerpts.pdf https://www.economicclub.org/sites/default/files/MoynihanExc...
sp332 7y ago
Regulations can raise barriers to entry. But "at best", banks haven't just gambled away all the deposits leaving customers with no recourse lately. Wells Fargo has been defrauding a lot of people, but at least they're paying billions in fines for it. It's not enough to keep them from doing it I guess, but I'd argue that fewer regulations would probably make that situation worse and not better.
- camjohnson26 7y ago
  How do you know that regulations are why the banks haven’t gambled away all the money? There’s no law against me gambling away my savings but that doesn’t mean I’ll do it. There’s other incentives in the system, for example the desire to avoid an angry mob of depositors burning your bank to the ground. Some regulations are good but the ones we have are overburdensome. Even huge startups like Robinhood can’t get it right and the laws around what constitutes a security for ICO offerings are so vague that no one actually knows if they’re breaking the law or not.
andrew311 7y ago
This has been my experience as someone who started a fintech company and has friends in compliance departments at banks. Highly bureaucratic on both the bank and regulator side. Compliance reviews are mostly an expensive song and dance by the banks. People jump from bank to regulator and vice versa all the time so there is rampant cronyism. Combine the cost of this song and dance with the cronyism and it becomes nearly impossible for a startup without a ton of funding.

jakelazaroff 7y ago

If that's the case, why do banks consistently push to loosen regulations? Can you point to an instance of banks lobbying for increased oversight and restrictions? Making a bank should be hard. I don't want some unknown startup to come in to "move fast and break things", because "things" in this case means "people's savings".

camjohnson26 7y ago
Well there’s the CEO of Bank of America saying “Dodd-Frank is fine, None of us are trying to touch it”. The big banks could push a lot harder against regulation than they do. https://www.economicclub.org/sites/default/files/MoynihanExcerpts.pdf https://www.economicclub.org/sites/default/files/MoynihanExc...

sp332 7y ago

Regulations can raise barriers to entry. But "at best", banks haven't just gambled away all the deposits leaving customers with no recourse lately. Wells Fargo has been defrauding a lot of people, but at least they're paying billions in fines for it. It's not enough to keep them from doing it I guess, but I'd argue that fewer regulations would probably make that situation worse and not better.

camjohnson26 7y ago
How do you know that regulations are why the banks haven’t gambled away all the money? There’s no law against me gambling away my savings but that doesn’t mean I’ll do it. There’s other incentives in the system, for example the desire to avoid an angry mob of depositors burning your bank to the ground. Some regulations are good but the ones we have are overburdensome. Even huge startups like Robinhood can’t get it right and the laws around what constitutes a security for ICO offerings are so vague that no one actually knows if they’re breaking the law or not.

andrew311 7y ago

This has been my experience as someone who started a fintech company and has friends in compliance departments at banks. Highly bureaucratic on both the bank and regulator side. Compliance reviews are mostly an expensive song and dance by the banks. People jump from bank to regulator and vice versa all the time so there is rampant cronyism. Combine the cost of this song and dance with the cronyism and it becomes nearly impossible for a startup without a ton of funding.