Hold your horses, regulators! You may have heard that the Obama administration has “taken an initial step to put its imprint on the government, ordering work halted on all federal regulations left unfinished at the end of the Bush era until they can be reviewed by the new president’s team.” According to a Washington Post article, this sort of move is fairly standard operating procedure for all first-term presidents dating back to Ronald Reagan — Bush (the second) and Clinton did something similar.

So what does this mean? Is this an attempt by Obama to lessen the amount of federal regulation in force? Could this review lead to increased regulation? In light of the enormous financial scandals of late — à la Madoff and Stanford and all things related to the bank bailout — it seems unlikely that this administration will choose the path of less regulation. A more likely explanation is that this team simply wants to get its arms around what has been proposed and what is pending prior to its entry in the federal register. Doing so will ensure that whatever goes on the books is crafted in a manner that fits with this administration’s perspectives and supports the programs that it has already introduced. As there are sure to be many regulations now in limbo, there are certainly some in categories likely to get the most attention the quickest. It is Accuity’s Viewpoint that we will first see regulations dealing with:

1. Beefing up the Fair Credit Reporting Act and related credit regulations
2. Creating new rules for ratings agencies
3. Changing asset standards, for example placing limits on risk-based capital like credit default swaps
4. Compensation standards for all types for firms receiving bailouts or guarantees
5. AML-like requirements to identify fraud schemes

Time will tell if our predictions are correct...