FDIC's Idea of Consumer Protection

Tom Brown shares a comical, but sad example of how wasteful the government can be in its enforcement of "consumer protection."

I got an up-close look at just how non-pretty this week, during a meeting with the chairman and CEO of a small business bank out west. It was 3:55 in the afternoon. The chairman was in the midst of explaining some underwriting issue or another when, in mid-sentence, he stopped, got up and walked over to the window, and pointed to six people who were leaving for the day.

They were from the consumer protection division the FDIC, he explained. The six had arrived on Monday and had told him they were there to review the bank’s compliance with consumer lending standards. They’d be there for two weeks.

So, what’s the matter, you’re thinking? That's what regulators do.

Here's the problem: the bank that the six regulators were planning to camp out in for two weeks doesn’t make consumer loans. It’s a business bank, whose consumer loan book consists of all of 20 loans that add up to a grand total of . . . . $1.3 million.

Do the math, and, per regulator, that works out to just over three loans of around $217,000 each. Two weeks!