Accredited investor rules
- Intent
- Protect unsophisticated investors from scams.
- Outcome
- Made it illegal to build wealth investing in private companies unless you were already rich. A regressive tax.
Good Intentions
Inspired by Patrick Collison's Fast, this is a collection of well intended government policies that had a very different outcome.
Anti-Money Laundering (AML)
- Intent
- Reduce crime by making it harder to profit from crime. Deputize financial services firms as arms of law enforcement, requiring them to track and report on suspicious activity by their customers.
- Outcome
- $213B was spent on financial crime compliance in 2020 globally, with less than 1% of illicit funds seized or frozen. The cost was passed along to law abiding customers in the form of higher prices, while making privacy and customer experience worse (data breaches, lower limits, etc).
Dodd-Frank Act
- Intent
- Consumer protection from bank failures, and ending "too big to fail".
- Outcome
- Very few new banks were created as they could not afford the heavier regulation. The big banks got bigger, and received less competition from startups.
Minimum wage
- Intent
- To alleviate poverty, reduce income inequality, and advance social justice
- Outcome
- Raised unemployment amongst lowest skilled and youngest workers. Businesses won't hire someone who can't contribute more than their cost in compensation.
Nuclear Regulatory Commission
- Intent
- Protect public health and safety from nuclear disasters.
- Outcome
- No new nuclear reactor sites have been built in the U.S. since the formation of the NRC in 1975.
Rent control
- Intent
- Make housing affordable for low income people.
- Outcome
- Reduced quantity and quality of low income housing, as that segment of the market became unprofitable for landlords.
Fair and Accurate Credit Transactions Act (FACTA) 2003
- Intent
- Consumer protection. Amended the Fair Credit Reporting Act (FCRA) to add provisions designed to improve the accuracy of credit reports and give consumers one free credit report a year from credit reporting companies.
- Outcome
- Mandated the site annualcreditreport.com to deliver free reports. The site is collaboratively run by the industry, CFPB, and FTC. It delivers a decidedly poor user experience and little service or educational value. Credit reporting accounted for 79% of CFPB consumer complaints in 2023. The industry accomplished its lobbying objective of deepening a regulatory moat around business models that exclude consumers from a direct participatory role in the credit reporting system. The FACT Act was the key legislation that helped entrench the current credit reporting oligopoly.
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Legal note for any overzealous lawyers out there: I am committed to following the law in every business I'm involved in, even if I am skeptical of the effectiveness of some laws listed above. One can believe in rule of law and exercise their first amendment rights at the same time.
See also: Progress, policies and projects that worked better than anyone expected.