A Bizarre Battle broke out between President Trump and the departing Head of a major Regulatory Agency, and it’s not a good sign for Compliance and Regulatory professionals

 

By Jack J. Kelly

 

As an Executive Recruiter I am always asked about the current job market. In particular, since I specialize in the placement of Compliance, Legal, Risk, Audit, Anti-Money Laundering, and Regulatory professionals, job seekers are specifically concerned about the prospects in this area under the new Trump administration.

I feel compelled to add a disclaimer at this time; this piece is not about politics, just business. Too many people dig their heels in backing one party over another. They will not listen to the other side’s opinions and thoughts. Even worse, they shout down anyone who dissents from their viewpoints. To me this is pointless. I just want to report the facts as best that I can (and toss in some humor and fun to break the tension). If you are interested where I stand politically, I consider myself a Libertarian. My superficial dilettante knowledge of this political perspective is that less government is good, and people should have more freedom, liberty and allowed to do whatever they want without government intrusion as long as they don’t harm anyone else. Now you may point out that this philosophy may be in direct conflict with a person who makes his living off of placing people who are dependent upon government rules, laws, and regulations. If you feel that way, you are absolutely correct. I am a hypocrite. While I want government out of my life in almost all aspects, hypocritically I like it only when there are more regulations as it is good for my business. At least I am honest about it.

For those who are not familiar with this space, the Compliance job market was blazing hot from about 2010 (a little after the financial crisis started stabilizing) until six to nine months ago. To quantify ‘hot’, I mean we placed a hella lot of people (no, it’s not a mistake. Hella is an American slang term that originated in East Oakland, California, but has since spread to become native slang to all of northern California. It is used as an adverb such as in “hella bad” or “hella good” and was eventually added to the Oxford English Dictionary in 2002).  Banks, investment banks, hedge funds, private equity firms and all type of financial services firms hired thousands of Compliance related professionals. The hiring was in large part a response to massive anti-money laundering violations, market rigging scandals, insider trading, the Bernie Madoff Ponzi scheme, and the wide ranging innovative and inappropriate activities conducted by financial institutions leading up to the financial crisis.  The government, media, public and regulators put pressure on companies to greatly enhance their Compliance departments. There was a war for talent in which salaries increased and headcount boomed at banks.

With the new Trump administration’s view of deregulation as a central theme in helping US businesses grow, it looked like the rapid growth would finally end. It largely did. But lately, it seems that the war on Compliance and Regulations continues.

Over the weekend a strange and bizarre situation arose in which the Consumer Financial Protection Bureau’s  (CFPB) long-time director, Richard Cordray, announced that he would leave office (speculation is that he is running for Governor of Ohio).  Cordray promoted his chief of staff, Leandra English, to serve as the agency’s acting director until a replacement was confirmed by the Senate.

Not missing a beat, President Trump announced his own guy for the exact same role. He picked Mick Mulvaney, who is currently director of the Office of Management and Budget.  Incredibly, Mulvaney is an avowed critic of the CFPB, and has called for severely limiting the agency’s authority.

Since the inception of the CFPB it has become a politicized. The CFPB was created as part of a wave of laws passed following the 2008 financial crisis to help consumers. The agency was given wide powers to become a vicious watchdog for consumers to help them in their interactions with banks, credit card companies, student loan entities, mortgage companies, debt collectors and payday lenders.

The Democrats love it and the Republicans don’t. Therefore, the difference between Cordray’s pick, English, and Mulvaney running the agency is huge.  Mulvaney’s appointment places a person who openly hates the agency he may now lead.  Mulvaney has been one of the agency’s biggest outspoken critics, and previously co-sponsored legislation to get rid of the agency. He literally said at a Congressional hearing: “I don’t like the fact that CFPB exists, I’ll be perfectly honest you…the agency is a joke . . . in a sick, sad way”.

Unfortunately for Compliance and regulatory professionals, this is not a good sign. It is yet another example of the diminished view of this area by the new administration.  The Libertarian in me should like the curtailment of a powerful government regulatory body, but the businessperson side of me is not too happy. I don’t believe Compliance and Regulatory people will be too pleased either. Mulvaney, however, probably had a very nice Thanksgiving weekend.

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