Rep. Maxine Waters, famously referred to as “an extraordinarily low IQ person” by President Trump, is set to lead the House Financial Services Committee, which oversees the banking, financial sector and its regulators. Trump may regret his battle with Waters as she will soon have authority to subpoena records and drag bankers, officials and executives kicking and screaming to testify and squirm before congress.
If you are not familiar with her, Waters is a vocal critic of the banks. She is on record for calling out Wells Fargo on their “fraudulent activities” and referred to Deutsche Bank as “one of the biggest money-laundering banks in the world perhaps.” Serving as a member of the bank and finance committee, she demanded more regulation of banks and vehemently opposed Trump’s deregulatory platform, which included rolling back regulations on banks and other financial services companies.
One target for Waters is the Consumer Financial Protection Bureau (CFPB). According to Waters, the CFPB has not faced any meaningful congressional scrutiny since Mick Mulvaney took charge of the regulatory agency. She warned that his will soon change–and it may once she takes on her new role. Waters has promised to ensure that the CFPB “can be allowed to resume its essential role of protecting consumers from harmful practices without interference from the Trump Administration.”
Another big target is President Trump’s relationship with Deutsche Bank. Waters has requested the bank to turn over documents concerning any ties that Trump might have to Russia without any results. As the new head of the committee, Waters will be able to subpoena records.
Compliance and regulations were brought to the forefront in response to the devastation caused by the financial crisis. Then, due to an almost never-ending litany of trading, money laundering, market rigging, ponzi and insider trading scandals, banks were forced to improve and grow their compliance programs. There was an accompanying boom in hiring, salaries soared for these professionals and companies invested fortunes into compliance programs.
Trump’s new administration put a quick end to the growth. Part of his platform called for deregulation–believing that with less regulations corporations would be freed to pursue new business lines, become more aggressive and, as a result, increase revenue and profits.
Bank and corporate executives quickly got the message. They did not have to keep up the pace of hiring compliance and related personnel. Over the last year, it became commonplace to see well-compensated, senior compliance professionals downsized. Big chunks of compliance staff were relocated to lower-cost locations to save money. In the process, mid-level employees were replaced with younger and lower paid people. New hires slowed to a crawl; compensation was flat or declined. Expectations (many times unrealistic) and requirements demand of newly hired compliance employees has dramatically risen, but the salaries offered significantly dropped lower. It was clear that deregulation took its toll on this area.
It will be interesting to see if Waters, along with anti-bank/pro-regulation Senators Bernie Sanders and Elizabeth Warren (who gave birth to the CFPB–not literally, but figuratively) will be successful in pushing back on deregulation and force companies to make compliance great again.
*Since everything is politicized nowadays, I’d like to be transparent. I’m not part of any political party and would identify as a Libertarian–if pushed to choose a tribe to join. You may ask, “Hey, Jack! I thought Libertarians were for limited government oversight and people should be free to do and say whatever they want without interference?” Yes, you got me! I’m a complete hypocrite when it comes to government regulations, as I earn my living placing compliance and regulatory personnel.