The Fed Finally Cuts the Red Tape

The Federal Reserve took an important step by acknowledging that its supervisory process has grown too dense to be useful. That is a welcome shift toward clarity and restraint.

The Fed now says banks may not need a 47-page checklist to prove they are doing basic banking. The Associated Press covered the change here.

The point is straightforward. More forms do not make the system safer. Clear priorities do. Efficiency is a risk-management tool, and regulators are finally treating it as such.

This is long overdue. Deregulation helps everyone. Over regulation drives up costs across the economy. When banks spend less time wrestling with paperwork, they can spend more time serving customers and getting capital where it belongs.

Common sense rules strengthen the financial system by focusing supervision on real risks instead of red tape. Washington should build on this step and keep clearing the clutter from a system that works best when it stays simple.