My new piece at the Washington Examiner examines how government responses to the last crisis impede response to the next one. The post-9/11 TSA checkpoint system, for example, “is now the one point in air travel where a virus-fearing traveler is least able to avoid prolonged physical or face-to-face contact with a stranger, as well as the… commingling of high-touch personal items on communal trays.” With the COVID-19 crisis, the old rules requiring banks to report “suspicious” transactions are causing all sorts of problems as ordinary customers radically change their banking habits. Worse, “Know Your Customer” regs rationalized on anti-terrorism grounds have become a bottleneck to processing thousands of applications for short-term funds from small businesses not previously known to the bank. Verifying KYC information on a small business, even if it’s got access to all its files, can take a month. Who’s supposed to wait that long amid today’s crisis? (more from colleague Diego Zuluaga on the rules’ failings)
I conclude: of the many good reasons for deregulation, one “is that it bolsters resilience when systems [like banks] are asked to cope with complex new perils.”
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