This country seems to have a love-hate relationship with regulations and regulators. Democrats think that stronger regulations – and enforcement – will serve as a preventative measure to curb greed. Republicans think that there are too many regulations, but rather than legislatively pare them to the bare necessity, they opt for lax enforcement.
With conservatives driving the truck, we have just finished several decades of ignoring regulations. Moreover, look what we have reaped as a result. On April 5th of this year, we lost 29 men in the explosion at the Upper Big Branch Mine in West Virginia. The owners of the mine ignored the multiple safety violations that led to the explosion because the government did little more than slap their wrist. The pro-life movement should be very upset over this unnecessary loss of life – the loss of husbands, the loss of fathers, and the breakup of families. In response to unacceptable disasters, the government really started regulating mine safety in the early 1900’s. As a result, we have seen mining disasters significantly reduced from 305 (1901-1925), to 147 (1926-1950), to 35 (1951-1975), and then to 19 (1976 to present). In other words, regulations work, especially when they are enforced.
A more recent example is the explosion, and loss of life, of the Deepwater Horizon oil platform used by BP to extract oil from the Gulf of Mexico. Transocean owned the drilling platform and Halliburton was responsible for the drilling operations. They used a safety valve, called a blowout preventer, that was not equipped with remote controlled triggers because the cost, $500,000, was deemed too expensive (in 2003) by the company and Mineral Management Service, the government agency that oversees offshore drilling operations. The price now seems a pittance compared to the billions in cleanup costs. It had been questioned, but not tested, as to whether these valves would work at such depths. The environmental disaster may never recovery. There is still on-going damage from the Exxon Valdez disaster in Alaska in 1989.
We are too dependent on oil to stop offshore drilling. However, this disaster could had been prevented had Republican appointed regulators not been in bed with the oil industry. Remember that Cheney had a private meeting with oil executives just after entering office and, allowed them to write the rules governing their industry. Those industry-driven rules were all about increasing profits and decreasing costs – but in ways that seriously compromised safety and the environment. There is no excuse for not having the necessary cleanup equipment immediately available to contain any leaks. The fact that it has been 21 days since the explosion with over one million gallons a day being pumped into the Gulf shows just how unprepared the oil industry is when faced with a disaster.
You have probably wondered when I would bring up Wall Street and the banking industry. Many, many mistakes have been made in regulating the financial industry, not the least of which has been lax enforcement by the SEC and other government agencies tasked with overseeing them. Bernie Madoff could have been caught many years before if the SEC had listened to the whistleblowers and paid attention to the accounting irregularities brought to their attention. Had they been enforcing the regulations on the books we might never have had to experience the financial meltdown of 2008 and 2009.
Attempts have been made, obviously partisan ones, to blame the Democrats for the financial meltdown but it has been Republicans driving the truck. There was an obvious collision between Bush’s desire to encourage homeownership, especially among minorities, and his belief that markets do best when left alone. In 2004, Bush asked Congress for authority to eliminate the down payment requirement for federal housing administration loans. As noted in USAToday (1/20/2004), “Nothing-down options are available on the private mortgage market, but, in general, they require the borrower to have pristine credit. Bush’s proposed change would extend the nothing-down option to borrowers with blemished credit.” In that same year, his administration blocked state governments from preventing predatory lending practices and did not enforce common-sense regulations on lenders. By 2007, Bush decided to allow a federal housing agency to guarantee mortgages of distressed homeowners. Therefore, when you read opinions that the Democrats caused the financial meltdown, pay them no heed. Democrats contributed to the dilemma but by no means are solely to blame.
My overall point is that regulations – and their enforcement – have a valuable role to play in a stabilized and fair economy. Ignore them if you will, as Republicans are prone to do, but the price is quite steep. There was a reason, during the Bush administration, that contaminated products from China flooded our markets.