Opinion

Trumped-up regulations jack up costs, and you pay the tab

Evidence is piling up that a devious scheme is being used by leftist politicians to fund their pet causes– to use government power to trump up charges, levy fines against companies, then use the extorted money to pay for favorite giveaway programs.

The most recent glaring example is an arm of the European Union fining Google five billion dollars for “breaching” EU rules concocted aggressively under the guise of “protecting” European consumers. This action follows on the heels last month of the EU fining Facebook 110 million Euros for providing “misleading information”.

How many more bureaucrats and regulators will the EU now be able to hire with an extra $5 billion, to continue their confiscatory merry-go-round? How many more “investigations” will the EU be able to launch now, new nets to get their grubby hands on even more billions?

This is what the left does when it gets into power. By confiscating revenue earned, liberals raise money from companies to ram a liberal agenda down the throats of citizens. The left has created a lot of these Trees Bearing the Golden Fruit. It’s a scam, abusing and bastardizing the regulatory process, to redistribute wealth while causing America’s businesses to create mammoth compliance departments that contribute no revenue.

This swindle-scam works like this: Liberals spot successful companies with lots of revenue, then dream up charges against them in order to use government power to steal stockholders’ money, in the form of fines. Liberals often pave the way for this dishonesty by passing new “laws” or rules to justify their actions. Washington has about 35 rules or regulations for every law, and they have thousands of laws. They make their rules broad and vague enough to charge companies with all kinds of “illegal activity”. Then the money-grubbing politicians authorize the bureaucrats to settle the charges by paying stiff fines. Governments then spend the money to implement their political causes.

Don’t fool yourself into thinking this rarely happens. It has become an epidemic in America, now spreading to other developed countries. It has been going on a long time, but now getting worse.

When Obama was president, he created a regulatory state and was a master at this scam. In his last year, the Obama administration’s “regulations took a $1.9 trillion annual toll on the economy”. An example is Obama’s Consumer Financial Protection Bureau, packed by Obama loyalists exercising sweeping powers to write and enforce rules allowing the government to pry money from companies. The result? The CFPB launched “fishing expeditions” and company raids, in order to collect major slush money for liberal programs.

During the Obama years, American banks paid staggering amounts of fines to federal and state piggy-banks. Investment firm Stifel Company reported in February that these fines totaled $243 billion. There is no rational correlation between most of these fines and serious bank “transgressions”. Even worse, Obama’s Attorney General Holder allocated billions of dollars of this money for “consumer relief”, which involved distributing huge amounts to “radical left-wing groups of Obama Loyalists”, according to Investors Business Daily. Very little money actually got back to so-called “victims”.

Readers of this column may not care much about the trillions that companies are forced to pay in fines—- that is, until you learn, as consumers, you are paying through the nose in jacked-up costs for goods and services you purchase. To offset the fines, banks must charge you more for services and must pay you less interest on savings accounts and CDs.

Most financial institutions must answer to five or six regulators and prepare for examinations on compliance with dozens of laws. At one time, I was president of a national broker-dealer firm registered federally and in 50 states, and my firm had to answer to 108 regulatory agencies. And regulators demand “go-away” money to settle their allegations and go away.

As governments expand their power, the potential for abuse expands with them. We see extraordinary abuses of power go unpunished. At some point, aggregated fines fund a regulatory deep state, which is a government within the government. It makes costs skyrocket, consumers pay more, and eventually breaks the camel’s back.

John R. Smith

John R. Smith is chairman of BIZPAC, the Business Political Action Committee of Palm Beach County, and owner of a financial services company. He is a frequent columnist for BizPac Review.
John R. Smith

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