At a holiday party last month, an acquaintance asked a pointed question about banks. A well-informed person, she was aware of banks’ arguments that overregulation was keeping them from making loans, but she was somewhat skeptical of that argument. When told that indeed such was the case, she responded: “Well, how can banks be made to act ethically without regulations?”

Everyone nods when speakers promote industry unity. Working together makes sense. Unfortunately, the emotional pull of “We’re different” can overpower the intellectual argument, at least for a time.

Customers are starving for guidance. Try thinking like a dentist

…would you have heard a peep about fees? This was the man who got the world to stop ripping off the “greedy music companies” and to pay for songs downloaded from the Apple iTunes store instead.

“Not everyone thinks they are cut out for political involvement.” That’s the opening line of a box in this month’s cover story (p. 30). It’s true enough as far as it goes. Not everyone is cut out for a singing career, either, or for being a Navy Seal. You need to be able to carry a tune for the first, and be able to swim and be willing to fight for the second.

If you were accused of something you didn’t do, would you stand mute, or refute the allegation? The answer should be obvious. “Truth will out” doesn’t mean one shouldn’t do everything possible to assist the process.   

It’s not like banks didn’t know this was coming. Still, all the stories about the one-year anniversary of the passage of the Dodd-Frank Act have made it abundantly clear that an onslaught of new rules and regulations has begun. Many of the 3,000 new Federal Register pages written so far to implement pieces of the law have dealt with the more arcane areas of financial services not directly related to traditional banking. But that will soon change.

The marketplace shows no mercy. It can’t—it doesn’t work that way. That fact is often lost on policymakers as they deliberate laws, rules, regs, advisories, and sundry other means to make people and organizations do what they think ought to be done. That attitude has become critical for two reasons: 1. government involvement in business is at a modern high and rising, and 2. the speed of change in business has rarely been greater.

Some possible remedies suggested by two vendors

A year ago, consultant Jo Ann Barefoot did the industry a service in her cover story on the emergence of “UDAP”—unfair and deceptive acts and practices—as a broadly applied standard by which banks would be measured. Since then, UDAP has been incorporated into the bank regulatory regime in a big way. The Dodd-Frank Act expanded it by adding the word “abusive” (making it UDAAP) and created a new agency to enforce it: the Consumer Financial Protection Bureau.