The Challenge of Regulators
A couple of issues back in Windows in Financial Services, I suggested fintech vendors ought to take a regulator to dinner to show their appreciation for the way new regulations drive new technology investments. In the area of risk, perhaps the free dinner ought to be extended to judges, and Eliot Spitzer, although I suspect Wall Streeters are busy funding his gubernatorial campaign in the hopes he will be less trouble in Albany than in Manhattan. In a risk management newsletter, Riskmetrics' Arnold Amstutz asks "Are Markets, Regulators, or Investors More Challenging?" and looks at the increasing skepticism surveys have uncovered in investor attitudes toward investment firms. He finds safety in quotations -- while blaming Spitzer for some of this, he also quotes a former SEC economist hrired by Smith Barney plaintiffs, who concluded the firm's advice was flawed, understated the real risk of stock-heavy investing, and that presentation materials were "very close to, if not, false and misleading." He does conclude that firms need to provide customers with objective risk measures, which RiskMetrics just happens to provide. http://www.riskmetrics.com
Which reminds me, I was talking to a trading and risk expert at one of New York's largest banks this week and he said a goal for them is to go well beyond the minimum requirements in compliance and try to create value, some sort of ROI. I forgot to ask if they had found any. So much for the bulldog reporter.
