Tabs

Friday, June 11, 2010

Reg Reform Impact: 4.87 Million Fewer US Jobs, Higher Borrowing Costs

According to an Institute of International Finance report, the cumulative impact of proposed banking regulations would lower US real GDP growth by 2.7% through 2020, and result in 4.87 million fewer jobs than the economy would have otherwise created. As discussed in prior posts, the regulatory burden for many banks is at a breaking point and some provisions of the proposed reform will have a direct impact on the economic recovery. The report found that the implementation of all proposed international regulatory reforms would strip an average 0.6 percentage points from real GDP growth annually for the G3 – United States, Euro Area, and Japan – through 2015. The G3 would have 10.12 million fewer jobs through 2020 than would otherwise be the case.

Passage of the regulatory reform would also cause consumers to pay more for loans. Real lending rates in the US would be 169 basis points higher from 2011 through 2015 as banks reconcile the additional reporting and compliance expenses.

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