“Ingratiating” Compliance and the Modern Regulatory State

Walter OlsonIrecently recommended a piece intwoinstallments by financial technology blogger Patrick McKenzie, in particular a section on how laws against lying to banks enable (and are meant to enable) prosecutors togo after offenses unrelated to banking. There ’s much more in McKenzie’s piece, including a pointed discussion of how the modern regulatory apparatus tends to inculcate a certain posture from the compliance staff of regulated entities:Regulation is an iterated game; both regulators and financial institutions expect to meet each other many times over the years. Regulators, in particular, expect to meet individual CEOs and Chief Compliance Officers many times over their careers, and derive a portion of their power over large organizations by being able to end individuals ’ careers.… everyone knows that a Compliance Officer who has lost the trust of their regulator isdone.I would add that this fatal sanction of the lifted eyebrow (as it has been called in some other legal contexts) is even more final in lacking any formal process of appeal or review, by a judge or otherwise.Financial regulation is a trust game; merely conveying to reference checkers that you ’d prefer not dealing with someone again is enough to blackball them. ….Compliance reports to two masters by nature andeveryone who deals with compliance is aware of this.… You simply need to be able to function as a profit ‐​seeking capitalist a...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs