That it took until the end of last year to pass legislation dismantling the Interstate Commerce Commission points up a sad reality: Once the government comes in to regulate an industry on some aspect or another, it generally manages to outwear its welcome.

The Interstate Commerce Commission, our first regulatory agency, was established in 1887 to control railroad rates. And, though time and technology - especially the automobile - forced competitive reins on railroad monopolies by the 1940s, the ICC kept rolling along well into the 1990s.

Why is this relevant to banking?

We have had similar experience.

Take Glass-Steagall - the most significant restraint on bank expansion and diversification today. This 1933 act was passed in large part to keep banks from taking the unsold remnants of the securities they had underwritten and putting them in the accounts of their trust customers. It also was intended to eliminate the policy of making loan decisions with an eye to suggesting the securities the bank had underwritten in its investment banking operations.

Today, these possible conflicts are prevented by other regulations and legislation.

And with investment bankers stealing so much of banking's deposit base and lending business, many feel that a failure to relax the 1933 prohibition against the combining of commercial banking and investment banking functions could lead to the death of our commercial banking industry as we know it.

Yet, look at the inability to gain alterations in Glass-Steagall despite lack of serious opposition from the investment banking industry.

Examples of this tenet need not all be of the breadth of the Glass- Steagall Act or the Interstate Commerce Commission.

Bank delays in clearing checks and giving their depositors collected funds led to the Fed's Regulation CC, which in many cases has become a rose-strewn path for swindlers to use in cashing bogus checks and escaping before the bank could learn the truth.

Now some lawmakers are even proposing that banks must keep the envelope with the posted date on it to determine if someone can be charged late fees on payments instead of just relying on when the payment got into the bank.

William Watson, president of Cross Keys Bank in St. Joseph, La., has sent Rep. Richard Baker, R-La., a letter describing several legal requirements that to Mr. Watson appear incongruous at least.

One particular provision that bothered Mr. Watson was the requirement that banks cannot discriminate based on age, except that Congress has "created the magic number of 62 when it is O.K. to discriminate in favor of a citizen."

Then there was the bank whose credit-scoring system discriminated against those under 25 - so they cannot get into too much borrowing trouble before they learn to budget their incomes. The bank "had to deal with the OCC as if they had committed some heinous discriminatory act."

Certainly every banker reading this column could give other examples of laws and regulations that just do not make sense today.

But as the Interstate Commerce Commission, Glass-Steagall Act, and Mr. Watson's examples show, once these restraints are on the books, it is almost impossible to remove them. (Unless you contend that 108 years under an agency is not an example of the "almost impossible.")

Mr. Nadler is a contributing editor of the American Banker and professor of finance at the Rutgers University Graduate School of Management.

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