The Wall Street Journal - Risk and Compliance
U.S. banking regulators are putting a bigger emphasis on risk management in their enforcement actions, citing lenders for having weak controls in place.
The Wall Street Journal Morning Risk quotes Guidehouse’s Q2 Financial Services Enforcement Actions Tracker analysis. Weak governance was a reason behind 41% of enforcement actions issued during the first half of 2019. That is higher than in each of the previous four calendar years, when governance was cited in an average of 19% of enforcement actions. The enforcement actions tracker further describes a governance deficiency as a lapse in the oversight or internal checks that prevent banks from violating the law.
The focus on governance comes as enforcement actions overall have declined in the decade following the subprime mortgage crisis. During the first half of the year, regulators issued 63 enforcement orders, roughly on par with the first two months of 2018, but down 43% from the same period four years earlier.
“Banks have spent a tremendous amount of time, resources and dollars improving their compliance management systems,” said Christopher Sicuranza, managing director in Guidehouse’s Banking, Insurance and Capital Markets practice. "You’re starting to see a lot of those actions and activities really paying off.”
Banks have spent a tremendous amount of time, resources and dollars improving their compliance management systems. You’re starting to see a lot of those actions and activities really paying off.