On March 6, former first lady Nancy Reagan passed away at the age of 94. To her critics, she perhaps symbolized an overly simplistic view when it came to complex problems (her “Just Say No” anti-drug campaign remains a benchmark for good-intentioned naivete among many people my age). To her supporters, she was part of the Greatest Generation’s impact on America, and of course, an integral part of the Regan era, which saw a return to American prosperity, international influence, and national pride. But for many, regardless of their politics, Nancy Reagan was a symbol of a more patrician and genteel kind of politics that seems strangely alien in today’s campaign environment.
I bring this up cautiously, because Compliance Week is not a forum for discussing politics per se, nor is it my role as its chief editor to inject politics into our larger discussions about corporate ethics, compliance, risk, and governance. But we are in the middle of a remarkably unusual campaign season and, whatever its outcome, it would appear that there are major implications for corporate compliance in our future.
I had held off on writing this column for some time because I kept expecting there to be a pause in the action in the GOP and Democratic primary campaigns, but that was a fool’s errand. In the last week alone, we have seen a remarkably tumultuous GOP primary debate, the return of Mitt Romney as a potential spoiler candidate at the Republican National Convention, higher intensity between Hillary Clinton and Bernie Sanders at their debate, and more. Usually by Super Tuesday, there is a fairly good sense of who the nominees will be, but not so this time around. And that is troubling because of what is at stake for compliance.
On one extreme, we have Donald Trump, who pledges to dismantle the Environmental Protection Agency and the Department of Education and repeal the Patient Protection and Affordable Care Act (better known as Obamacare). And Trump is not alone; his rivals, such as Marco Rubio and Ted Cruz have made similar, though hardly identical, pledges, although none have gone so far as to propose a 50-foot wall from the Gulf of Mexico to the Pacific Ocean, to be built alongside with some kind of national deportation force to purge the country of illegal immigrants (and, presumably, punish those businesses that employ them).
On the other extreme, we have Bernie Sanders campaign, who has made plain his disdain for billionaires in general, and Wall Street in particular. He feels Wall Street is not nearly regulated closely enough and has noted more than once that he opposed the various bailouts that kept the economy going during the meltdown of 2008-2009. Hillary Clinton is far more accommodating of Wall Street, but at the most recent Democratic debate, both candidates joined the calls for Michigan’s Governor Rick Snyder to resign or face recall in light of the horrendous Flint water crisis¾which underscores just how badly good compliance is needed, and what can happen in its absence.
And therein lies the central issue here: Everybody running for President is advocating some kind of sweeping regulatory effort that carries with it significant compliance ramifications. A lead curtain of new regulations, or increasingly severe regulations, provides the worst kind of job security for the compliance community, as the margin for failure becomes that much smaller and the price of non-compliance can reach terrifying levels. Plus, when regulation happens that swiftly, that severely, bad things tend to happen. Ask anybody who has ever dealt with healthcare compliance after Obamacare was passed.
But the other side of things—sweeping deregulation—poses a separate kind of risk. When compliance officers are suddenly sidelined in large numbers, there goes with them a fundamental risk management capability that every organization needs, whether they know it or not. And what can happen in cases where entire lines of business are suddenly relieved of longstanding rules is that the freedom that results can turn to misbehavior of a kind that only invites fresh re-regulation, even swifter and more severe than before. The deregulation of Wall Street that helped lead to the financial crisis of 2008-2009 has given the Bernie Sanders of the world much grist for their regulatory mill. That was never the intent.
And so, we face November with a swathe of unsettling options before us. Too much, not enough, or some middle ground in which the winner simply doesn’t intend to live up to the promises that got him or her into office? That might be the most preferable outcome, but it certainly isn’t what one actively hopes for when going to the voting booth. After all, the point of a democracy isn’t too partake in continued self-delusion. It’s to figure out the best path forward by the people, for the people. Compliance is an integral part of the business world that dominates much of our electoral attention every four years. Let us hope that what results is not only something compliance officers can live with, but something that enables them to continue doing their job to the best of their ability, and helping business itself reach ever greater heights.