Regulation is a tool to change the landscape and the conditions in which businesses and individuals operate.
You can regulate in a way that benefits certain types of business, i.e. breaking up a monopoly helps smaller businesses. Making the phone companies lease their lines to smaller competitors is a GOOD thing for competition and diversity.
The notion that regulation only ever stifles the economy, in that sense, is simply incorrect.
That is not to say that there aren't regulations that have a stifling/dampening effect, nor that there shouldn't be. Sometimes you do want to raise the bar across the board. We need banks to be sufficiently capitalized in order to be able to pay their customers back.
That may be stifling for banks, but it's in OUR best interest.