On the Lawfare blog, Professor Ganesh Sitaraman of Vanderbilt Law School and the Center for American Progress offers an argument about regulatory reform that I’d never seen before. Reforms to the regulatory system that have passed the House and await action in the Senate, he says, “have serious consequences for national security and the fight against terrorism.”
It’s a bit of a Hail Mary in defense of the densely burdensome regulatory state we live under today. Alas, Professor Sitaraman’s illustration of the argument undercuts his point badly. Had pending regulatory reforms been the law when today’s financial surveillance regulations were promulgated, we’d likely be more secure and prosperous than we are now.
In a narrow sense, Professor Sitaraman is obviously right: Any procedure that fetters our government may keep it from subduing whatever actor it has designated a terrorist. But it is a strong part of our traditions not to assume the government is always right—it often isn’t. And we are still supposed to be living in a democracy, where the government must answer to the people.
Should we cut the government loose from these moorings because they hinder the fight against terrorism? To argue that they do, Professor Sitaraman extols financial surveillance regulation that almost certainly does more harm than good.
The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issues regulations that require banks and other financial services providers to conduct various forms of recordkeeping and financial surveillance on their customers. The costs of these regulations globally are well into the billions of dollars annually. More importantly they have resulted in bank “de-risking” of economic sectors and even entire countries. By visiting financial exclusion on people in developing countries and industries around the world, the global financial surveillance regime has fostered conditions in which terrorist ideologies take root and in which terrorists can survive and thrive.
Meanwhile, access to capital is not a gating factor on terrorism, which is as inexpensive as it is ineffective. The counterterrorism benefits of financial surveillance are too often taken as a given because they are hard to quantify, but intentions are not evidence, and a lack of evidence is no reason to assume benefits.
Under the proposed Regulatory Accountability Act, agencies would have to use the “least costly” approach to achieving their regulatory aims. This would require agencies like FinCEN not to burden the private sector with billions in costs absent good evidence of security and other benefits.
Another reform, the REINS Act (“Regulations from the Executive in Need of Scrutiny”) would require congressional approval before major rules go into effect. While fears of terrorism still have our nation in thrall, it’s hard to believe that democratic oversight would slow down regulations with arguable security benefits. But Professor Sitaraman argues that regulations “would be susceptible to bank lobbyists trying to block it and to partisan gridlock and gamesmanship.”
For the sake of the billions around the world still striving to reach Western levels of wealth—please, please give us bank lobbyists, gridlock, and gamesmanship. They would be much better than the financial surveillance regime we’ve got. Professor Sitaraman’s effort to cloak opposition to regulatory reform in national security garb is unavailing.