The weight of compliance

Compliance is set to become a core area in financial services because one result of the current financial crisis is that people will want to prevent another similar disaster from occurring and the method used to fight this will be (likely) regulation.

After the Great Depression there was a wave of compliance and regulatory measures brought in and it was during this time that the FDIC (Federal Deposit Insurance Corporation) was created, thus guaranteeing depositors funds were safe.

Basel II which was seen as the ‘new’ answer to how risk was mitigated will probably be replaced by some other form of guidance, we’ll call it Basel III for the sake of prediction, or Basel II 2.0 or whatever you like. The fact is that the burden of compliance is set to rise but if not done correctly it could actually happen with little or no benefit to clients or the broader economy.

If compliance becomes weighted heavily in a process rather than principles based approach then it could hamper innovation and the creation of …

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Every which way but loose. The economy speaks….

The Irish economy is in a downturn, if you don’t know this then you have already died and either gone to heaven (where the boom is still on) or to hell (in which you are living halfway through 2009 already).

The factors involved in the Irish economic slowdown are multi-faceted, on one hand there was the property boom, then there was the corresponding financial expansion, as well as a strong dosage of greed thrown in by Joe Public. All of this was the foundation for the explosive cocktail we will one day look back upon and refer to as the ‘credit crunch’.

Mortgages are harder to place with lenders, the lenders themselves don’t have the liquidity to keep giving out money, that is the downside of fractional reserve banking. Yesterdays ESRI report showed that property, construction, and lending are all down at serious lows for the same period last year. The forecast for 2007 was to see total lending rise by €25 billion, figures for the first quarter show that only 4.4 billion was drawn, assuming the slow down continues …

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