Reg relief may not mean lower compliance costs for banks
By John Heltman
Nearly 10 years since the onset of the financial crisis, the once all-consuming demand for improved safety and soundness in banking has been replaced by a single-minded pursuit of a streamlined regulatory structure emphasizing economic growth. …But other ideas could be more costly to banks. Karen Shaw Petrou, managing partner with Federal Financial Analytics, noted that Treasury Secretary-designate Steven Mnuchin’s nascent support for a “21st-century Glass-Steagall” separating commercial and investment bank functions could potentially be costly for multinational banks depending on how it is executed. In the United Kingdom, for example, regulators have put forward a ring-fencing regime that separates commercial and investment banking activities in a way that appears reminiscent of what Mnuchin has in mind. “I wouldn’t even begin to contemplate whether it’s more or less [expensive] across the board, except to say that it would be at least the same if not more, because here you have different regimes covering different parts of the holding company,” Petrou said. “That means, basically, a lot more [compliance employees] than these banks thought they needed to have when everything was in one place.”