[Photo by John Eisenschenk - Flickr]

There is solid evidence that excessive regulation since the financial crisis has kept the U.S. and other developed economies from growing faster. Apparently, voters and governments are beginning to take notice. Perhaps now U.S. regulators will get the message.

Any discussion of this issue must begin with Brexit, a populist revolt against the administrative state that the European Union has become. With their divorce from the European Union, the people of Britain will be able to set their own course on trade, regulation and taxation, freeing that resourceful country to compete for investment. If the 2010 Dodd-Frank Act remains in force in the U.S., London could be the center of world finance within 5 years.

Even leaders of the G-20 - the world’s most economically developed countries - have begun to register concern about excessive regulation. In 2009 the G-20 deputized the Financial Stability Board, a largely European organization of central banks and financial regulators, to develop a comprehensive global system of financial regulation.

The U.S. Treasury and the Federal Reserve are members and endorsed its actions with enthusiasm, pushing to implement its directives through the U.S. Financial Stability Oversight Council. Shortly after receiving its mandate, the Financial Stability Board designated 39 banks and 9 insurance companies as “global systemically important financial institutions” or G-SIFIs. This included 3 U.S. insurers - AIG, Prudential and MetLife - which the Financial Stability Oversight Council then dutifully designated as SIFIs in the U.S.

But in this year’s G-20 meeting in China, the leaders clearly expressed reservations about the mandate they had given the Financial Stability Board. Although they have routinely endorsed the board’s regulatory program, this year the G-20 leaders added a significant coda, promising “to address any material unintended consequences” of the board’s proposals. The concern shows that political leaders have finally come to see the trade-off between regulation and economic growth.