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New Public Citizen Book, ‘Reality Check,’ Makes the Case for Regulations

You’d think the financial crash in 2008 would have taught us some lessons. But apparently, we haven’t learned. Despite the fact that deregulation – which allowed the big banks and financial institutions to operate without oversight – contributed to the near collapse of the economy just a few years ago, we still haven’t instituted the safeguards needed to ensure it doesn’t happen again.

Reality Check: The Forgotten Lessons of Deregulation and Unsung Successes of Sensible Safeguards,” a book released today at an event at Public Citizen, provides an in-depth look at how deregulation derailed the economy and puts forth a series of case studies that counter allegations made against public protections in recent years. The book is by our own Taylor Lincoln, research director of Public Citizen’s Congress Watch program.

Taylor Lincoln Reality Check
Watch video of the discussion moderated by Public Citizen’s Taylor Lincoln (pictured) at the reception for the release of the new book, “Reality Check.”

“Four years ago, hardly anybody disputed that the housing bubble and financial crisis cried out for better regulation, but that lesson was soon forgotten,” said Lincoln. “We hope that our book will provoke a more thoughtful debate moving forward.”

“Reality Check” chronicles the damage caused by insufficient oversight of mortgage lending, financial derivatives, commodities and residential electricity services. The book illustrates that even the bailed-out mortgage buyers Fannie Mae and Freddie Mac, which were often incorrectly portrayed as government agencies, succumbed because of a shortage of government oversight.

“Reality Check” also debunks myths that have flourished in recent years about how safeguards work.

Today’s symposium at our Washington, D.C., headquarters featured a discussion with Neil Barofsky, a federal prosecutor who was chosen to serve as the special inspector general overseeing the $700 billion Troubled Asset Relief Program; Brooksley Born, former chairperson of the Commodity Futures Trading Commission; and former U.S. Rep. Brad Miller (D-N.C.), who was instrumental in creating the Consumer Financial Protection Bureau. (You can watch a video of the event here.)

The discussion was lively and fascinating, and the speakers were surprisingly candid about the challenges of crusading against powerful Wall Street interests. For instance, Barofsky recounted how he was told that it wouldn’t be in the best interest of his long-term career to be too hard on the banks. The solution Barofsky and others advocate: breaking up the big banks.

Want to get the book? You can order it for your Kindle via Amazon by going to http://www.amazon.com/Reality-Check-ebook/dp/B00C11TJY4. Or you can download individual chapters at https://www.citizen.org/reality-check-lessons-of-deregulation-successes-of-safeguards-ebook.

Contrary to claims that new rules are written by civil servants with little oversight, the book provides case studies illustrating that federal agencies are among the most regulated entities in the United States. Agency obligations have slowed the rulemaking process to a crawl.

For instance, the book recounts a 12-year saga surrounding the effort to complete a much-needed and uncontroversial update to a rule on the operation of cranes. More broadly, the book documents that delays in completing workplace rules concerning well-understood hazards have resulted in tens of thousands of avoidable illnesses and injuries.

Members of Congress often accuse agencies of handing down rules willy-nilly without oversight. But the rulemaking process has become so cumbersome that agencies fail to meet deadlines set by Congress nearly 80 percent of the time.

Meanwhile, the allegations surrounding public safeguards have kept many in the public arena from understanding that such rules tend to be well-crafted. A series of case studies in the book shows that regulations have a remarkable track record of success. Not only do rules tend to exceed their public protection objectives, they often do so at a fraction of predicted costs and to the benefit of industries that earlier fought mightily to stop them.

Finally, the book revisits the oft-recited trope that regulations are responsible for “killing jobs.” Numerous studies have found that new public safeguards have a beneficial effect on employment. Meanwhile, surveys have consistently found that small businesses rate regulations low on their list of concerns when contemplating whether to hire new employees.

“Reality Check” is available on Kindle at http://www.amazon.com/Reality-Check-ebook/dp/B00C11TJY4. Individual chapters can be downloaded by going to https://www.citizen.org/reality-check-lessons-of-deregulation-successes-of-safeguards-ebook.

The event can be viewed at http://www.ustream.tv/recorded/30825643.

Angela Bradbery is director of communications for Public Citizen.