Ken Mehlman – Why Regulation is Bad for Business
How is the regulatory climate in Washington affecting businesses and Wall Street?
Partial Transcript
Ken Mehlman: I think that certainly today there are a lot of folks in business that are sitting on cash, this has gotten a tremendous amount of attention. 3 trillion dollars on corporate balance sheets, why is that? I think one of the reasons is regulation. One of the reasons is, if you’re the CEO of a company and you know that in the future the cost of employing people is going to go up because of health care legislation. You know that your taxes are likely to go up, you know that the cost of capitol is likely to increase for lots of reasons. The fact that there’s a wall of debt coming too. For all those reasons, you’re certainly thinking, “I want to put some cash aside.” Otherwise I think the different rules, the different regulations have an impact on different industries. Certainly Finn Reg, a lot of the regulations are still being thought about and have not yet been implemented, that will be key for the next several years. That clearly will have an impact on operations that used to be, for example, at Banks it will now become a dependent or go into other institutions. Clearly health care will have an impact, there was an interesting article in the New York Times yesterday about the mergers that are occurring in the healthcare space in part, because the healthcare reform was designed to encourage more collaboration within the health care industry. Part of that collaboration is occurring through mergers. So I definitely think that the recent legislative changes will produce significant regulatory impacts, which will then produce a business impact.
Do you see these impacts as mostly negative?
Ken Mehlman: Certainly I think that today, if your goal is maximum employment, the possibility that there will be a significant tax increase, and the fact that the cost of capitol could increase, and the fact that employing workers could be more expensive because of healthcare reform, all those things are likely to make a number of companies less likely to hire workers. On the other hand, others might argue that there are societal benefits from all three. That’s a fine argument to make, it’s just important to understand the realities for both perspectives.
How is the regulatory climate in Washington affecting businesses and Wall Street?
Partial Transcript
Ken Mehlman: I think that certainly today there are a lot of folks in business that are sitting on cash, this has gotten a tremendous amount of attention. 3 trillion dollars on corporate balance sheets, why is that? I think one of the reasons is regulation. One of the reasons is, if you’re the CEO of a company and you know that in the future the cost of employing people is going to go up because of health care legislation. You know that your taxes are likely to go up, you know that the cost of capitol is likely to increase for lots of reasons. The fact that there’s a wall of debt coming too. For all those reasons, you’re certainly thinking, “I want to put some cash aside.” Otherwise I think the different rules, the different regulations have an impact on different industries. Certainly Finn Reg, a lot of the regulations are still being thought about and have not yet been implemented, that will be key for the next several years. That clearly will have an impact on operations that used to be, for example, at Banks it will now become a dependent or go into other institutions. Clearly health care will have an impact, there was an interesting article in the New York Times yesterday about the mergers that are occurring in the healthcare space in part, because the healthcare reform was designed to encourage more collaboration within the health care industry. Part of that collaboration is occurring through mergers. So I definitely think that the recent legislative changes will produce significant regulatory impacts, which will then produce a business impact.
Do you see these impacts as mostly negative?
Ken Mehlman: Certainly I think that today, if your goal is maximum employment, the possibility that there will be a significant tax increase, and the fact that the cost of capitol could increase, and the fact that employing workers could be more expensive because of healthcare reform, all those things are likely to make a number of companies less likely to hire workers. On the other hand, others might argue that there are societal benefits from all three. That’s a fine argument to make, it’s just important to understand the realities for both perspectives.
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