Federal Reserve Board Suggests Terrifying Action

In one of the most terrifying and perplexing moves to date, the Federal Reserve Board proposes to relieve banks’ boards of directors of “excessive regulatory duties,” which makes no sense at all. Although I am not a proponent of over regulation, boards must be held accountable and provide oversight on important bank decisions that influence the long-term sustainability and reputation of the bank.

At a time when Wells Fargo is under intense scrutiny, and for good reason, Donald Trump is attempting to lessen accountability rather than increase it. How is a board expected to effectively fulfill their fiduciary responsibility, including advocating for a psychologically healthy, safe and fair workplace, if it is kept in the dark about the inner workings of their organization? Toxic cultures are perpetuated when boards are uninformed or misinformed about important organizational actions. When the board is kept in the dark about such actions, their ability to function effectively ceases to exist.

I maintain that if the boards of directors of Wells Fargo and Uber had been better informed earlier, the companies’ gross mistakes in judgement could have been avoided. As it now stands, both companies are in great peril and their very survival hangs in the balance.

In my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire, I discuss the importance of good board governance and the dangers associated with its demise. Without supporting bank boards to improve their oversight capabilities, the Federal Reserve Board is essentially removing a basic and essential tool from their proverbial toolbox.

Photo credit: BIGSTOCK

Have Industry Leaders Earned the Right to Self Regulate?

It used to be called letting the inmates run the asylum—business insiders are now putting in requests to the White House to have different regulatory policies overturned. Trump strategist Steve Bannon has described this as “the deconstruction of the administrative state.”

In a March 5 article in the New York Times, “Leashes Come Off Wall Street, Gun Sellers, Polluters and More,” Eric Lipton and Binyamin Appelbaum reveal how telecomm giants will no longer have to protect customers from having their personal information hacked, the big banks won’t need to require extra fees against high-risk trades, and people with severe mental health issues will be free to purchase guns. These changes and many are part of “one of the most significant shifts in regulatory policy in recent decades,” they write.

Reviewing regulations and policies is necessary to ensure that they are still relevant and that they provide protections against the abuse of power, corruption and the erosion of human rights. Business interests must also be taken into account and must be addressed when regulations create unfair competitive advantages and restrain growth and performance. But what we are witnessing isn’t a thoughtful balance with which other administrations have struggled, but the wholesale elimination and gutting of regulatory safeguards.

Last year I posted 150 blogs, the majority of which focused on the abuse of power, control, corruption and scandals in every sector in our society. One of the notable exceptions was my blog post about how well Mary Barra, the CEO of General Motors, handled the emission switch scandal. Sadly, the reason I haven't written more positive stories is because there are so few to report on. Because of this, I assert that there is too little evidence of corporations with a record of balancing social conscience with business objectives for organizational leaders to have earned the right to self-regulate. Taking the leash off without a thoughtful review is irresponsible and dangerous.

Photo credit: Wikipedia Commons