One of the biggest nostrums these days from conservatives and some elements of the business community is that our governments, at both the state and national levels, should cut down on regulation and oversight of business.
While it makes sense to streamline regulations that hamper small business, in particular, it is also instructive to parse our history for instances where lax regulation caused pain for our people and our economy.
Rhode Islanders of a certain age will remember that 23 years ago this month, our state was in the grip of the credit union crisis. This was caused largely by the failure of both the administration of then-Gov. Edward DiPrete, a Republican, and the Democratic-controlled General Assembly to adequately regulate state-chartered financial institutions. This lack of regulation caused the collapse of the credit-union insurer, the notorious RISDIC, and slammed the Rhode Island economy during a recession.
In the end, taxpayers had to bail out credit union depositors after a run on these financial institutions. This all could have been avoided had the R.I. government insisted on ensuring that the credit unions were properly regulated and lived up to the federal standards required by most other states.
Which reminds us that for decades, businesses were allowed to use our rivers and Narragansett Bay as open sewers. The taxpayers have spent billions over the years to mitigate this pollution that was caused, again, by lax regulation.
On the federal level, we all saw the mess hat poorly regulated financial markets caused in the national banking fiasco of 2008, when the national economy took a nosedive and almost brought down the international banking structure as a result of look-the-other way regulators.
More recently, there was the 38 Studios bankruptcy that has RI taxpayers on the hook for as much as $90 million. Would this really have happened if lawmakers and economic development officials had done their due diligence and oversight?
One only has to look at the recent polluted drinking water problems in Charlestown, West Virginia as yet another example of government regulators dropping the ball.
And even older generation of Rhode Islanders will recall the mid-1950s plan to place an oil refinery on the northern end of Jamestown by Oklahoma-based Commerce Oil. Just think how our tourism, recreational boating and fishing industries would fare if an oil refinery was belching pollution into the Bay?
We need to make sure that regulatory changes are accompanied by careful, prudent consideration and rigorous cost-benefit analysis, not flavor-of-the moment policies or knee-jerk reactions to the need for more jobs.