The Dodd-Frank Wall Street Reform and Consumer Protection Act, and its 533 new rules, is now law (in contrast, Sarbanes-Oxley had 16). The firm of Davis Polk & Wardwell notes the SEC will write 95 new rules. The new Bureau of Consumer Financial Protection will write 24, and the Financial Stability Oversight Council will write 56. The names alone have Ayn Rand rolling in her grave.
It’s a safe bet your world, and the way in which you conduct business, will change. Politicians are involved, so it remains to be seen if said change is for the better. But Barney Frank was busy crafting new legislation to fix problems with the bill prior to its passage. As the Wall Street Journal wryly notes, if you’re pre-occupied with new legislation to fix the original legislation when the original legislation hasn’t yet passed, well…it says a lot about the quality of the original legislation.
I’m reminded of what we wrote back in 2008, right before it all went bad. Ironically, we were taking a sober look back at Sarbanes-Oxley and related legislation in response to the last market downturn, and focused on one of Harvard Business Review‘s Breakthrough Ideas for 2007. Marketing consultant David Weinberger warned that accountability at the corporate level had gone horribly wrong and has morphed into what he called accountabalism, which is based on four related beliefs and practices. The first is that complex problems can be solved at the next level of detail–one more form, one more policy is all it will take. The second is that accountabalism assumes perfection–if anything goes wrong, it’s a sign the entire system is broken. The third is that accountabalism is blind to human nature–we’re masters of self-delusion, especially about the possibility of getting caught doing something we shouldn’t. The last is that accountabalism bureaucratizes responsibility–we remove the capability for individual responsibility and human judgment while claiming to increase it.