Column: Gone are the good old days of business

by Alexander Roberts

A couple of weeks ago I attended a gala for the Supportive Housing Network of New York, a coalition of nonprofit agencies and developers of housing for special needs populations, the homeless with mental illness, developmental disabilities, substance abuse, etc. We”™re talking big bucks ”” professional agencies that have spent hundreds of millions of dollars on more than 35,000 units in New York City and the suburbs. There were tax credit syndicators, accountants, lawyers, title companies and bankers whom I have known for 20 years. And all of them, to a person, had the same complaint.

Doing business today is too damn hard, almost impossible, because of onerous government regulation. It seems that while the financial crisis brought raises and golden parachutes for its architects, everybody else got Dodd-Frank. They also lamented the 2002 law called Sarbanes-Oxley.

Let”™s start with Dodd-Frank. I met a banker I dealt with 20 years ago who used to provide my nonprofit with funding for property acquisitions within two weeks. He is now the head of a major New York City nonprofit himself and said lending like that would never happen today because of the new regulations. He said the Dodd-Frank Wall Street Reform and Consumer Protection Act that was supposed to bring more accountability and transparency has instead brought tons of paperwork and paralysis. And nobody thinks the original goal of eliminating the “too big to fail” banks actually occurred.

Quoting A. Scott Anderson, CEO of Zions Bank in Salt Lake City, the ABA Banking Journal wrote, “Overregulation often reduces bank flexibility to meet the unique circumstances of customers. Common sense is replaced by complex rules. Fear of violating regulations and potential lawsuits leads to fewer loans, hurting customers and their communities.”

Then, there”™s the Sarbanes-Oxley Act of 2002. This congressional creation, which still has some provisions thankfully delayed, was supposed to address the accounting scandals such as Enron and WorldCom. Aside from putting small accountants out of business, the endless certification requirements and personal liability for everything corporate have primarily benefited lawyers.

A closing I had on an affordable housing development last year that in the past might have required signing 30 documents, ended up with more than 100. As far back as 2003, Richard Kincaid of Equity Office Properties said, “The flaw with Sarbanes-Oxley, with all the certification requirements and other mandates, is that if you”™re going to commit a fraud, you”™re going to sign the documents anyway.”

As executive director of a nonprofit, I have seen government regulations go from the sublime to the ridiculous. In our federal contracts for housing counseling today, my counselors have to document their time in writing every 15 minutes. And today, the national software reporting system for filing audits is down because of a security breach. Charities required by law to file their federal A-133 audits between July and December were told in an email that they can”™t file until the problem is fixed.

There is a reason why two people with no government experience are leading the Republican presidential field. People are fed up with government that makes problems worse instead of better. But the nation needs experienced leaders who understand business and something called benefit-cost analysis. When you do that, you find out whether proposed legislation will actually make things better.

Alexander Roberts is executive director of the fair housing group Community Innovations Inc., headquartered in White Plains. He examines demographics in Westchester County in a column for the Business Journal. Contact him at aroberts@chigrants.org or 914-683-1010.