Will financial regulations achieve their lofty goals?

Position:Editorial
 
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Most economists would likely say the great recession came to an end last summer. For some participants in the U.S. economy, Cm sure that's true. Corporate coffers are supposedly flush with an aggregate of nearly $2 trillion, awaiting investment to drive business expansion, jobs and ultimately a path out of the economic slowdown. Or so we continually hear.

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Though technically that recession may be a thing of the past, it certainly doesn't feel like it--at least for so many of the financial executives still struggling to bring their businesses all the way back. We're still riddled with much uncertainty, and facing a raft of new laws and regulations designed to exert tighter control over U.S. business so as to avert an economic relapse. But even the regulators are overwhelmed with the new laws and unable to make their rule-writing deadlines.

But will the regulations--when finally implemented--achieve their lofty goals? This is debatable, at best. As the Dodd-Frank Wall Street Reform and Consumer Protection Act marks its one-year anniversary this month, in this issue we analyze its effects from several angles. In the From Where I Sit feature, we offer contrasting views of one controversial aspect of the new legislation--the provision regarding corporate whistleblowers potentially reaping huge bounties for reporting directly to the SEC original information about violations that lead to successful enforcement.

Attorney Reuben Guttman says it will promote a reduction in corporate fraud and illicit activity. But Rep. Michael Grimm (R-N.Y.), a former FBI agent with expertise in investigating financial fraud, warns it might well encourage employees to bypass established internal compliance programs and undermine legitimate efforts to unearth fraud more quickly and...

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