The Urgent Need for Regulatory Consolidation and avoid 100,000 Pages of New Regulatory Compliance Rules
The Volcker rule, a centerpiece of the new financial regulation known as Dodd-Frank, is an attempt to protect the financial system from risk. It is clear in concept prohibiting banks from making investment bets with their own money. But it has proved to be a mouthful for the oversight authorities.
In the financial institutions the millions of brokerage customers and thousands of corporate and investment clients, are not the top priority these days. The No. 1 client is the regulatory oversight authorities.
On the other hand if fully integrated and implemented, regulatory compliance should provide a fascinating account and insight of the company's ability to adapt and to act in accordance with GRC mandates of compliance. No way to address neither consumer protection nor systemic risks in financial institutions.
Copenhagen Compliance recommends
Treasury Secretary Jacob Lew must get the Volcker rule of the Dodd-Frank ready for compliance. The mandate is unfinished and five years after a financial meltdown Dodd-Frank is only 40% complete. No way to address neither consumer protection I the society nor systemic risks in financial institutions.
The financial crisis did not kill all financial institutions but faulty ununderstandable compliance, stress tests and flawed compliance disclosures can. Copenhagen Compliance feels that there is an urgent need for regulatory consolidation at the top. Start with consolidating the regulatory agencies. There are several examples where relationship between banking and securities regulators including refusing to share documents or to travel across town to one another's offices results in damaging the compliance efforts.
- The sad state of affairs at the regulatory level is unacceptable for the long-term health of our financial system or the global economy
- Financial institutions are forced to break the rules because bewildered compliance is not an option. Nobody knows the rules.
- The regulators that are faced with their own disagreements have decided a year ago to stop meeting with financial institutions, further clouding their efforts to maintain compliance guidance and get critical feedback on what is going on in the financial field.
- Therefore, regulators should not spend another year writing a couple of critical rules without input from the C level managers who will have to comply with the initial guidance and then rewrite it to be effective and provide definitions.
A lot has happened since Dodd-Frank was enacted in 2010. There have been 13,789 pages of rules – more than 15 million words – written by more than 10 agencies with additional regulatory rule every 2.8 days at an average. No way to address neither consumer protection nor systemic risk.
By extrapolating the new regulations in global compliance to date, there is more than 100,000 pages of new regulatory rules to come.
