Truth in Savings and the Failure of Legislative Methodology

Abstract

The federal Truth in Savings Act (Truth in Savings) provides one example of failed legislative problem solving. On its face, Truth in Savings is a congressional attempt to solve constituents' problems. The statute, however, appears unlikely to resolve the issues presented to Congress and may even create new and unintended problems that will make matters worse. Truth in Savings, like many other legislative efforts, fails adequately to address constituents' problems because the methodology employed by legislative drafters suffers from a fundamental flaw - it has no built-in mechanism to define rigorously the problem being addressed. Without first identifying the problem, legislation stands little chance of providing an effective solution. This Article is divided into three parts. Part I presents a case study of Truth in Savings as a failed congressional attempt to solve a perceived problem. Part II examines the deficiencies in the problem-solving methodology employed in the legislative process that produced Truth in Savings. Finally, Part III discusses prospects for improving the methodology employed in the legislative process.

Keywords: Truth in Savings Act, banking and finance