Posts by Financial market reg
Financial CHOICE Act v. 2: Reducing Protections Against Systemic Risk
The nearly 600-page Republican bill to deregulate the financial markets moved forward in the House earlier this month, exiting the Financial Services Committee on May 4. Emboldened by the results of the 2016 election, the bill takes a considerably more aggressive approach than the original Financial Choice Act introduced in the last Congress. The next…
Read MoreWhistleblowing Update: Tone Deaf at the Top and Regulatory Lapses
Despite the fact (or perhaps due to the fact) that whistleblowing can be a very effective policing mechanism against wrongdoing, confidential employee hotlines often exist in obscurity, as a New York Times article pointed out concerning the Fox News Bill O’Reilly scandal. It cites one employment expert to the effect that companies often “bury information about how employees…
Read MorePrescriptive, “Rules-Based” Regulation is Key to Enhancing Cybersecurity in Financial Institutions
There is much debate in the compliance community about the virtues and drawbacks of a “principles-based” versus a “rules-based” regulatory approach in ensuring effective compliance with regulatory obligations. On the one hand, in “principles-based” regulation agencies establish broad but well-articulated principles that a business is expected to follow. There is clarity about the regulatory objective,…
Read MoreGovernor Tarullo’s Departure Will Create a Vacuum in Bank Regulation: How Big Will it Be?
Governor Daniel Tarullo’s resignation as governor of the Federal Reserve Board has important implications for future bank regulation and supervision. Its most likely medium-term effect is to reduce the priority the Fed has given to this component of its mandate. Governor Tarullo has played an outsized role during his eight years at the Fed. He…
Read MoreImplementing President Trump’s Dodd-Frank Directive May Lead to More Bailouts, Not Fewer, in the Next Crisis
Last Friday, February 3, nearly two weeks into his term, President Trump issued a directive to revamp financial market regulation, aimed squarely at the Dodd-Frank Act of 2010 without naming it but also encompassing the financial regulatory framework as a whole. The directive presents a vague framework in the form of several “core principles” that dovetail…
Read MoreCourt Rulings on SEC’s In-house Courts May Accelerate Deregulatory Trend But Compliance Professionals Should Not be Complacent
Two recent federal appeals courts take opposite positions on the constitutionality of how the SEC hires its administrative law judges (ALJs), who administer the federal securities laws in its in-house courts. The D.C. Circuit found the process constitutional, while the 10th Circuit did not. Commentators note that, given this conflict and the importance of the issue for other federal…
Read MoreWells Fargo’s fraudulent account openings: What are the (initial) risk management lessons?
It is intriguing that the intense level of media attention and Congressional furor over Wells Fargo’s fraudulent account opening scandal may equal or exceed that involving the LIBOR and Forex rigging scandals that resulted in billions of dollars of fines. The financial institutions that settled the LIBOR cases had allegedly manipulated the benchmark interbank interest…
Read MoreWasting a Crisis: Why Securities Regulation Fails
This is a book review of Paul Mahoney’s new book, Wasting a Crisis:Why Securities Regulation Fails, Chicago: The University of Chicago Press, 2015. The book is an excellent treatment and critique of the market failure narrative on financial reform with a focus on the New Deal securities statutes. Mahoney employs to great effect standard event studies…
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