Tag Archives: regulation

Federal Reserve Bank Regulations

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The current iteration of the Federal Reserve Bank Board of Governors, with several President Donald Trump appointees, is proposing a rule that would significantly ease the amount of cash big banks must keep on hand to cover bills due within 30 days.  The savings from this are expected to aggregate to $77 billion per year—not a lot compared to the total of liquid assets held by those banks already.

There is a rumbling, though.  An Obama appointee to the BoG, Lael Brainard, is objecting to the regulatory easing.

She added that banks are “providing ample credit and earning ample profits” under current liquidity requirements.

Yep. There it is again.  “I do think at a certain point you’ve made enough money. …you can just keep on making it if you’re providing a good product or providing good service.”

Because the Progressive-Democrat Fed Governor knows better what constitutes sufficient profit and what “good” service is; market participants’ views are unimportant, and she does not hear them.

The End of Free Speech

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At least in Europe.  The European Court of Human Rights ruled last Thursday that it’s impermissible to make crude remarks about Islam’s Muhammed if those remarks fall outside what Government deems acceptable.  It seems that, in the course of a 2009 seminar, a woman commented on Muhammed’s marriage to his child bride:

[Muhammed] liked to do it with children…. A 56-year-old and a six-year-old? … What do we call it, if it is not pedophilia?

The ECHR ruled that remark unobjective, lacking historical background, and intended to disparage Islam.

Government will decide what parameters must be present in “free” speech—here, objectivity, with Government defining that parameter—Government will decide the environment and context within which “free” speech must be made.  Government has decided that rude speech is verboten.

The answer to bad speech is not more speech, but—in Europe—no speech other than that which is Government approved.

A Health Care Coverage Step

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Alexander Acosta, Steven Mnuchin, and Alex Azar, respectively Secretaries of Labor, Treasury, and Health and Human Services, are in the process of offering one.  They’re putting together a rule that would expand HRAs, Health Reimbursement Arrangements.  These are plans that allow employers to reimburse employees for certain qualified health expenses.  Their expansion consists of two parts:

  • permit[ting] employers to offer HRAs to reimburse employees for health insurance purchased in the individual market—allowing employers to provide a contribution as significant as they would have made for the premiums of a traditional employer-sponsored plan.
  • allow[ing] employers that offer a traditional group plan to offer an HRA of up to $1,800 a year to reimburse an employee for certain qualified medical expenses such as stand-alone dental benefits.

Both of these parts would be done on an income tax-free basis for the employee.

Of course, this would compete against Obamacare, and that’s anathema for the Progressive-Democrats in the House and Senate.

Their ire notwithstanding, the rule would be that step toward competition, and competition is one of the ways of making health care and health care coverage less economically onerous to a family.

Building It

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Chao Deng’s piece in Saturday’s Wall Street Journal chronicled the failure of People’s Republic of China rampant infrastructure spending to stimulate economic activity.

China bolstered economic growth for decades by pouring trillions of dollars into roads, factories, railroads and more, and doubled down to protect the economy from the global financial crisis of the last decade.

Deng went to lengths to point out that, for all those trillions, businesses did not appear, factories remain unused, roads and railroads are only lightly traveled, and even the high rise apartment buildings remain largely empty.

He—and the PRC government—missed the root cause of the fruitlessness of that spending.

Build it and they will come only works in a free market economy where no one needs government permission to engage in economic (or any other) activity.

Pharma and Drug Prices

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The Trump administration has proposed a rule that would require companies advertising drugs to provide the list prices of those drugs in their advertising—including their television advertising.  Big Pharma is opposed, and wants instead to be left to voluntarily provide pricing information by having links in their advertising that would guide folks to a separate Web site.

I sympathize with Big Pharma on this. Government regulation already is out of hand; the Trump administration is reducing that, and this is an unnecessary addition.

There is an alternative.

The FDA could compile a list of drug list prices; region-by-region retail prices at places like Walgreens, CVS, Walmart, amazon (note that this is not an exhaustive list of retailers); and the tier within which each drug sits.  This list then could be made available on the FDA’s Web site home page above the fold.

This more central source, in addition to encouraging competition among drug companies, would encourage more competition among retailers.