In grade school most young people learn about how a bill from either the State House or Congress is made. The bill addresses a problem with a solution that people debate over and some will like it and some will not. The debate is rarely over the solution for we all want things to work well, but the details or the regulations. There will be some who want fewer regulations and be allowed to do what they want to and there will be some that want more regulations because they do not trust the benefit of the doubt, usually the result is something in between or the middle.

In an article by Pete Schroeder, Michelle Price, and Lananh Nguyen of Reuters, the CEO of the biggest banks in the US testified before a committee in Washington about regulations that could affect their industry.

Unlike most industries, the banking industry has many of the same large players over the years which allows their lobbying groups to be consistent with their messages. The banking lobby associations spent time lobbying the members of the committee well before the annual Washington hearing. Similar to all organizations on every committee there are a few people who likely open to changing their votes, while some are camped in on side or the other.

The CEOs warn the regulations will impact the way they do business and some of the loans the anti bank people on the committee want the banks to lend will not go forth. The pro bank people believe the banks will tend to the right thing for them and their customers. In the world of big banking there is much truth on both sides of the coin.

The reporting states the hearing quickly became a battle of narratives with many Deomcrats casting skepticisms on the industry’s complaints and accusing them of overemphasizing the risks, while the Republicans and the CEOs stressed the potential adverse impact on a range of products and services. The issue of unintended consequences was raised – an effect the regulations will have which was not the desire outcome but ends up the logical thing to do.

Linking to dividend paying stocks, many CEOs of profitable companies end up before Washington committee hearings because they are the larger players in their fields and they continue to be profitable. The lawmakers often wish to tinker and need the public advice of the profitable players for them to stay profitable but make something better for the consumers. In the process, the CEOs are briefed by their public relations people, their lobbyists in order to offer the empathy and come out of the hearings with the solutions that help the company. Sometimes the solution is you will work with us to help draft the legislation? Yes, we will work with you. If the CEO is not briefed before a committee, then it is time to find alternatives.

There are more questions than answers, till the next time – to raising questions.