FIN 201 UZUN 2016: The Roles Of Financial Regulatory Agencies

Financial Regulatory Agencies
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David Enrich, in his article, ‘Regulator Wants Financial Industry to Self-Report Wrongdoing’ addresses the wants of the Commodity Futures Trading Commission to wanting to shift its policing strategy. The financial regulatory commission wants the financial markets and institutions to report themselves whenever they misconduct themselves in the industry. They promise to reduce penalties substantially and drop cases for those that will comply with the strategy. It also says that self-reporting will help tighten the company's relationship with the agency. It will be such that instead of severely punishing it, it will help the company solve some of the internal issues. The financial institutions according to Saunders & Cornett 2015 must be regulated to avoid market failure and the resulting costs to the society and economy (Chapter 1, p. 17). Several issues, some of which are discussed below make such agencies to come up with such strategies.
Political pressures- The author begins by relating the condition of the agency during Obama’s time and Trump’s time. He says that the agency had been aggressive during Obama’s time after being asleep for so long. It is during Trump’s time that it has changed its policing strategy. What this means is that the aggressiveness has lessened. This is considering the fact that Trump is a businessman. The majority of his cabinet together with his advisor own large corporations in the industry.
Economic pressures- The financial crisis makes the members of the financial industry have the problem of complying with the financial laws and regulations. Any business is after making profits. When the financial crisis hit, it becomes difficult for these companies to make profits and at the same time comply with the law. It is therefore inevitable for them to get into trouble. It could be one of the reasons the regulatory agency in question is lessening the policy.
Compliance of the members- Changes are inevitable and constant. However, it is sad that things stay the same. This is in terms of compliance (Silvia, 2017). From the article, the companies had issues with compliance. The CEO of the agenc...