It's likely that the issue of reducing regulatory burden will once again be up for debate when the new Congress convenes. In the banking arena, some attention is always focused on consumer protection rules.

The burden issue is not new, of course. Although interest in reducing regulations waxes and wanes, and is always highly political, there's been broad-based agreement for some time that the cumulative regulatory load is excessive.

Many have long favored serious reassessment of all the rules. Yet despite several such attempts - presidential initiatives, paperwork reduction laws, and agency reviews, for example - major changes have not been forthcoming in the consumer protection area, where the complaints are the loudest. So what's the problem? Why so much talk and so little action?

One reason is that when it comes to consumer protection rules, the deregulation process is always misdirected by belief in myths. These widely held but flawed assumptions have always hobbled the process - so severely as to undercut any significant progress in reducing burden. Any new regulatory reform effort should begin with reassessing these deeply held but erroneous articles of faith.

Myth No. 1: The rules are filled with nonsense, and all we need to do is identify and get rid of the silly requirements.

Wrong! This is similar to the myth that the way to achieve a balanced budget is to do away with waste, fraud, and abuse in government spending.

True, there may be some regulatory nonsense but getting rid of it doesn't amount to much in truly reducing burdens. If the hunt is only for the inane, the yield will be small.

Better to recognize from the beginning that there is a good reason for most every consumer regulation and individual provision. Serious regulation cutters will find themselves put to a tough test - and typically fail it - when called to identify just what they would excise, while leaving all the "real" protections in place. In other words, just like the budget, it's fantasy to think that trimming only fat will reduce things much. Real progress demands more substantive cuts.

The better starting point is to acknowledge that almost every rule has some value, but that some rules provide more consumer benefits than others.

Said another way, a serious effort to reduce regulatory burden should begin with assigning relative value to all the protections, and ranking them in order of importance. The process should then focus on saving the more useful protections, and letting those with less value go. Acknowledging that everything has some merit also avoids insulting the sponsors of what's on the hit list. That too will help the effort succeed.

Myth No. 2: It's all the fault of the regulators.

For obvious reasons, this is a favorite on Capitol Hill. The usual assumption is that the Congress had a simple idea and the agency rule- writers went awry when they got the pen. The solution, therefore, is to get the agencies to rethink their approach. Wrong! Most all the consumer protection rules are based on statutes that are themselves very detailed.

In fact, there is very little room for the agencies to make meaningful cuts by themselves. This means that the hard choices are directly in the political arena, That, of course, is probably why they haven't been made. If anything is to be done, then the Congress must do the heavy lifting. It can't simply tell the agencies to review and streamline their rules, and expect dramatic results.

Myth No. 3: Consumer groups are the primary culprits.

Wrong! Certainly consumer groups often press for more legislation, but once a statute seems likely, it's usually the banks - more specifically, their lawyers - who press for rules.

The reason? They can't stand any ambiguity in how to comply, given the exposure to civil liability law suits for missteps. So the inevitable drumbeat begins for the Congress or the regulators to provide more "guidance" on how the new rules apply to each and every product and situation.

Any doubters on this point need only reflect on the Community Reinvestment Act reform project, driven by the industry's call for more predictability and certainty in CRA requirements. To an extent, that exercise also increased the burden on large banks through new data- collection requirements.

Myth No. 4: The way to get at the problem is to start with a cost- benefit analysis.

Wrong! First, there is no good way to measure the benefits with any certainty. Determining benefits is simply a value judgment that doesn't lend itself to quantitative analysis. Second, getting enough information on the cost side to make any meaningful comparison is one of the most burdensome exercises you could impose on the industry.

What then are we to do?

First, let's skip the breast-beating about inane regulations. It doesn't get us anywhere and sows the seeds of defeat.

Second, we should focus not on eliminating what makes no sense (the payoff won't be worth the effort), but on preserving protections that have the greatest value - recognizing that what is being trimmed may also protect some people.

Third, we need to be prepared for some "horror stories" from consumers when some rules are lifted. Any meaningful paring will involve some reduction in real benefits to some people, and there's no point in pretending otherwise.

Fourth, we should consider reducing the exposure to class action liability for missteps in compliance. This, above all, would help to curtail the industry's own destructive instinct to seek more rules.

Fifth, we must acknowledge that the burden of true regulatory reform falls mostly on the legislators' shoulders, not the regulators'.

Finally, and most important, we must drop the myths about regulatory reform if meaningful progress is to be made. Mr. Garwood is director of the Fed's division of consumer and community affairs.

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