WASHINGTON, DC – DECEMBER 11: Sen. Tim Scott (R-SC) talks with Sen. John Kennedy (R-LA) as they stand behind Sen. Mike Rounds (R-SD) ahead of a Senate Banking, Housing, and Urban Affairs Committee hearing where Consumer Financial Protection Bureau (CFPB) director Rohit Chopra will testify on Capitol Hill on December 11, 2024 in Washington, DC. The powerful financial watchdog agency is facing an uncertain future, with renewed Republican efforts to weaken the agency under a second Trump administration. The CFPB, established in 2010 through the Dodd-Frank Wall Street reform law to combat financial system abuses, has long been a target of conservative criticism. (Kent Nishimura/Getty Images)
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Capitalism is too fast for legislators. The latter is a positive statement about the past, present and future, but also a reminder to the political class to routinely pay heed to Lord Macaulay’s admonition that they observe “strict economy in every department of the state.”
Macaulay would likely smile on legislation from Sens. Tim Scott (R-SC) and John Kennedy (R-LA). The senators have recently introduced the Streamlining Transaction Reporting and Ensuring Anti-Money Laundering Improvements for a New Era Act, which will modernize 1970 banking legislation defined by a clear lack of strict economy.
It was in 1970 that the Bank Secrecy Act was passed. The Act required banks, credit unions and other financial institutions to assist the federal government in detecting and preventing financial crimes, including money laundering, terrorism financing, and all manner of other illicit activities. More specifically, the law required financial institutions to generate “currency transaction reports” for cash transactions north of $10,000, along with “suspicious activity reports” for $2,000 to $5,000 depending on the circumstances.
To read about the 55-year-old legislation is to quickly diagnose some of the problems with it. Stating what should be obvious, a dollar in 1970 is not what a dollar is in 2025. While economists have in a variety of ways perverted the meaning of inflation since 1970, it’s no reach to point out that a shrinking dollar has rendered $10,000 in 2025 an exceedingly pale imitation of what it was in 1970. Despite this truth, the Bank Secrecy Act has remained in place, unchanged, thus overwhelming financial institutions with enormous amounts of paperwork.
In a very positive sense, economic growth in 2025 renders that of 1970 more than pale. Which is a comment that $10,000 transactions in the present day are exponentially more common than they were fifty-five years ago. Financial institutions have on one hand benefited from soaring economic growth that, on the other hand, has substantially increased their paperwork and reporting thanks yet again to a calcified law.
Scott and Kennedy’s legislation recognizes the problem, and with their Act they’ll increase the reporting thresholds from $10,000 to $30,000, $2,000 to $3,000, and $5,000 to $10,000 respectively. It’s a very positive step, though arguably not enough.
To see why, it’s essential to contemplate yet again the value of the dollar in 1970 versus the present, along with the size of the U.S. economy in 2025 versus 1970. $30,000 is a pretty low number relative to the dollar’s decline over the decades, and it’s made even smaller when thought of relative to the economic growth that Americans have continued to create despite the various monetary errors since 1970.
It’s a long way of saying that Scott and Kennedy’s legislation could be greatly improved through an increase in the reporting thresholds. The simple truth is that $10,000 in the 1970s dollars represented a lot more wealth than $30,000 does in 2025.
The exciting news is that in 2025, we can see how the profit-motivated managed to prosper despite the immutability of legislation that needlessly piled paperwork on financial institutions so essential to economic growth. Which is just a comment that while Lord Macaulay would smile on Sens. Scott and Kennedy’s economy about the state, his smile would widen if the economy were quite a bit stricter.