- Former Managing Director and the Head of the Regulatory Management Team for JPMorgan Chase & Co. responsible for coordinating the firm’s internal dealings with supervisors and regulators globally.
- Designed and managed the firm’s Corporate Operational Risk function; and, prior to that, served as the firm’s Senior Credit Officer. He also was the General Manager of the Singapore Office and Regional Head of Credit for Asia Pacific. He was the Global Head of Credit Research and served for a time in Tokyo as the Head of the firm’s M&A Advisory function.
- Bank Supervision and Regulation Division of the Federal Reserve Bank of Cleveland.
- Founding member (JPMorgan) and Chairman, Operational Risk Data Exchange Association (ORX)
- Vice Chairman of the Board of Trustees of Case Western Reserve University and serves as Chairman of the Finance Committee.
- All 7 Best Practices
- Pre-Meeting Discovery Process
- One-on-One Call with Expert
- Meeting Summary Report
- Post-Meeting Engagement
Regulatory Management Strategies for Financial Institutions
It is no secret that the financial crisis of 2008 and its aftermath have increased the pressure and scrutiny on the financial services industry.
The Dodd-Frank Act of 2010 changed the U.S. regulatory environment dramatically, and the political fallout continues. Regulatory requirements and the sheer number of regulators and regulations continue to grow. New demands on financial institutions continue apace. Financial institutions, big and small, need to implement a robust regulatory management strategy to address this new environment.
The management of a firm's regulatory agenda requires a comprehensive approach – one that is integrated into all key business and risk management processes. Since regulators focus on mitigating risk across the board, financial institutions need a strategy to oversee regulatory implications that cross functions and business units. This strategy must entail collaboration and coordination across all areas of the company.
Fundamentally, it is always important to remember that regulators want companies to be financially successful and to operate in a safe and sound manner. They share this goal with bank management, shareholders, employees and customers. A successful regulatory management strategy incorporates regulatory requirements, standards and expectations into your standard business goals and operations.
A well-controlled, well-operated financial services business needs to understand its risk and control environment, and it needs a verifiable plan to assess and mitigate risks as appropriate. This is the primary requirement of the regulators as well. At times regulatory expectations and requirements can be unreasonable, or a particular requirement may appear to be tangential to the goals or needs of the firm. However, a financial company that runs its business well and profitably and serves its customers needs to be fully compliant with all laws and regulations.
It is completely appropriate for management to communicate its views and opinions to regulators, especially when it views regulatory policy, actions or requirements as unreasonable. A healthy and productive relationship with all regulatory agencies depends on open debate and discussion. However, it is also necessary to realize when the discussion is complete. Ongoing dissension or dismissiveness is never productive.
Companies should never allow a negative, adversarial culture against regulation to develop within their firm. Beyond the obvious risks of unintentionally sanctioning bad behavior, and inviting more scrutiny (with a “guilty until proven innocent” attitude on the part of regulators), companies that are viewed as uncooperative significantly compromise their credibility in future discussions with regulatory authorities. Companies that take an attitude of partnership with regulators will find their views received and measured on their merits.
Financial firms that navigate the regulatory waters effectively tend to follow these Best Practices:
- Maintain a constructive attitude. Understand that management and regulators share many of the same goals.
- Communicate actively. Maintain an active dialogue with all appropriate regulatory agencies and staff.
- Engage senior executives and business/risk managers. Ensure a culture of responsibility and accountability at the highest levels of the company.
- Engage in dialogue in order to have a voice in legislative policy and regulatory proposals. Develop and maintain networks with peers to discuss common regulatory developments.
- Develop formal and well-defined processes for examinations and other dealings with regulators. Document all key meetings and findings, including close-out meetings, and ensure a proper review of all information.
- Address each regulatory issue or finding rigorously. Develop a formal and comprehensive remediation program.
- Develop a ‘Black Swan’ program. Be prepared for both common and uncommon scenarios that might have an impact on your business.