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Michelle Bowman, a fifth-generation community banker, is poised to become the Federal Reserve’s top banking regulator. This appointment, alongside shifts at the Consumer Financial Protection Bureau, signals
The parallels are striking and urgent.
Our binary thinking about financial regulation — that more oversight equals more protection, and less oversight equals consumer harm — misses history’s most powerful lesson: The most effective regulatory reforms aren’t simply additive or subtractive, but transformative. They reimagine frameworks to expand access, unleash creativity and redistribute power away from entrenched interests.
Look back to 1980. President Carter, with Senator Ted Kennedy’s critical support, championed the deregulation of surface freight transportation against conventional political wisdom. These Democratic reformers weren’t surrendering to industry interests — they were democratizing essential services that touched every American’s life.
The pre-reform landscape was a study in regulatory capture. Interstate trucking functioned as a protected cartel maintaining artificially inflated prices. Railroad rules suffocated innovation, mandating unprofitable routes while preventing efficient pricing models. This system enriched incumbents while impoverishing consumers and entrepreneurs alike.
The results of deregulation were revolutionary. Within five years, consumers saved $15.4 billion annually on faster, more efficient shipping. Railroad costs plummeted by half. Delivery times compressed by 30%. The benefits cascaded throughout the economy, touching virtually every product and service Americans consumed.
But the most profound impacts were distributional. Deregulation doubled the percentage of owner-operators in trucking, creating entrepreneurial opportunities for thousands who had been locked out of the market. Black truck drivers increased their representation by more than 50% in the high-paying interstate segment. Consumers nationwide enjoyed lower prices for nearly everything moved by truck or rail. What had been portrayed as consumer protection turned out to be a barrier to economic mobility and consumer benefit.
Today’s financial regulatory structure creates similar distortions. Banks with assets over $10 billion operate in a fundamentally different regulatory universe than smaller institutions. This bifurcated system doesn’t just burden community banks. It effectively prevents new entrants from challenging established players with innovative models that might better serve underbanked populations.
What would genuine consumer-focused financial deregulation entail? Not a regulatory bonfire, but a realignment. It would calibrate oversight to actual risk profiles rather than institutional pedigrees. It would scale requirements proportionally to potential consumer harm, not incumbent protection. Above all, it would value expanded access and transparency over preserving ossified industry structures.
We’ve already glimpsed this future. When buy now/pay later services emerged in regulatory white space, they didn’t exploit consumers — they courted them. Many providers voluntarily implemented strict affordability checks and transparent fee disclosures before regulations mandated them. They recognized what regulators sometimes forget: In our hyperconnected age, consumer protection isn’t just regulatory compliance — it’s existential business strategy.
The digital transformation of financial services offers unprecedented potential for customization, access and efficiency. But realizing this potential requires regulatory frameworks that recognize the fundamental shifts in how consumers interact with financial products. The same smartphone that lets consumers instantly rate their driving service also allows them to publicly evaluate their banking experience, creating real-time accountability mechanisms that simply didn’t exist when our regulatory structure was designed.
Critics will insist financial services are too vital for regulatory experimentation. This fundamentally misreads history. When transportation deregulation faced similar resistance, skeptics warned of monopolization, deteriorating service and safety catastrophes. Reality delivered lower prices, vibrant competition and improved safety records instead.
Fintech’s promise — financial services that are more personalized, accessible and consumer-friendly — demands regulatory humility. This means acknowledging that innovation consistently outpaces regulatory frameworks, and that adaptation is not an abandonment of principle but adherence to purpose.
The challenge isn’t whether to regulate — it’s how to regulate wisely. We need surgical approaches targeting genuine consumer harms without amputating innovations that would serve the very people we claim to protect. This means recognizing that the nature of financial risk has evolved, and that our regulatory frameworks must evolve accordingly.
When President Carter signed those landmark deregulation bills in 1980, he followed empirical evidence. Today’s financial regulation demands similar evidence-based pragmatism — recognizing that sometimes, the most powerful consumer protection isn’t another disclosure form or compliance officer, but expanded options, vigorous competition and relentless innovation.