US Corporation May Be Forced Back To The Compliance Drawing Board
President Trump takes aim at laws that reshaped US banking in the aftermath of financial crisis President Donald Trump is on Friday due to take his first steps towards undoing parts of the Dodd-Frank reforms that reshaped US business in the wake of the financial crisis..
A new regulatory reform agenda in the US, followed by the election of President Donald Trump was expected. However the current US regimes ability to pull apart the present sweeping Dodd-Frank compliance reforms may be limited. President Trump has however taken the first steps towards dismantling the massive Dodd-Frank reforms.
If there is any hope of avoiding another meltdown, it is critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.
Cumbersome regulatory compliance issues
President Trump wants to kill two old regulations for every new one issued. Perhaps the Trump's order does not require that oversight agencies repeal two old rules for every new one they propose. Before they can do that they have to identify the two rules that can be revoked and find ways to offset costs of new regulations.
We have already seen that the Trump orders may not be meaningless. The mere existence of a perplexing Trump directive will slow down the work at various regulatory agencies, and therefore it probably will slow the regulatory process.
From time to time, companies are faced with regulatory Governance, Risk Management, Compliance (GRC) and IT-Security issues that are on the onset extremely cumbersome. It probably started with SOX (Sarbanes-Oxley Act) in 2004 for added good Governance, after the financial crisis in 2008. The Glass-Steagall Act, (37 pages) was replaced by Dodd-Frank (848 pages) for added Risk Management processes. 20,000 new regulatory requirements for the financial services industry were created in 2015 for added Compliance and to avoid big banks to fail.
Many claim that the financial crisis might not have happened at all, but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades.
From Massive and Complex To Convergence and Automation
Therefore all significant change can be an opportunity for disruptors and innovators to take charge and enforce innovation in the long run because complexity gives an advantage to all companies to do it correctly in the first place. If implemented according to the Copenhagen Compliance GRC3 http://www.copenhagencompliance.com/GRC3.html recommendations, companies will be able to save some of the 270 busd companies spend annually on compliance and avoid imposing painful processes on stakeholders in the long run. The last advantage of an adequate and proper GRC implementation is the exploited convergence opportunities it provides for e.g. IT and automation, just like a reliable GDPR implementation would.
A new reform agenda in the US following the election is a reality because the new regime argues that the regulatory compliance laws have constricted the US banks’ ability to do business. However, any attempt to roll it back will require tough compliance work to ensure the embedded processes do not affect other GRC processes. Perhaps in a few years, we will get better financial products as hundreds of billions of dollars of regulatory compliance costs every year are saved.