The Biden Administration & Compliance
Well, thank the Lord this is ending.
The Trump Administration has given the United States (and the world) four years of ignorance, incompetence, immorality, greed, divisiveness, and corruption. President Trump has been a singular menace to this country and the American experiment; and also to corporations that have struggled to navigate the cultural divisions Trump has so eagerly sewn — divisions that corporations never anticipated, much less wanted.
Now, hallelujah, Trump is going to exit the Washington stage. At last, we can begin to ponder what looms for corporate governance and compliance in a Joe Biden Administration.
The changes that a Biden Administration would produce fall into two categories. The first is specific to compliance professionals, about how you and your compliance programs intersect with regulators. Second is a much larger, amorphous change around business conduct, ethics, and leadership. Both could keep compliance officers busy for quite a while. Let’s take each one in turn.
Working With a Biden Administration
First, a Biden Administration means new leadership at the Justice Department, Securities and Exchange Commission, Office of Foreign Assets Control, and all the other executive branch agencies we all know and love so much.
Who will those leaders be? We don’t know, and speculating at this early juncture is just a parlor game. Moreover, the policies and practices those people will implement through their agencies are what matter to compliance officers — and on that front, we may not see as much change as some folks might expect.
For example, I won’t be surprised if we see more vigorous FCPA enforcement with larger fines and penalties. But the way in which the Justice Department pursues cases, and how companies then respond to that enforcement — will those things change in any substantive way? Probably not.
That is, show me a scenario where the Biden Administration would want to rescind the FCPA Corporate Enforcement Policy of the Trump Administration, which itself sprang from the FCPA Pilot Program of the Obama Administration. A move like that would make no sense, because encouraging companies to cooperate and take corporate compliance seriously is what any administration would want to do.
Likewise, we might see fresh updates to Justice Department guidelines for effective compliance programs — but I’m hard-pressed to see what significant departures from current guidelines that a Biden Administration could make. Any steps away from those guidelines could well result in companies being more reluctant to disclose misconduct: just keep quiet, remediate, and hope nobody in the regulatory world will discover the issue.
Nor do I see much change in how the Biden Administration would employ sanctions as a tool to exert foreign policy pressure. Which means sanctions will pose the same enforcement risk to businesses as it always has. Perhaps Biden might relax some sanctions against Iran in a new nuclear deal, or impose more against China for trade abuses — but sanctions’ fundamental role in government, and corporations’ response to it, isn’t going to change.
We could see policy changes at the Securities & Exchange Commission. I do expect new rules for disclosure about human capital, and (at long last) more clarity on ESG metrics that should be disclosed, such as climate change concerns. OSHA might step up enforcement of workplace harassment abuses, wage-and-hour violations. The Federal Trade Commission might pursue abuses against consumers more vigorously.
Well, whatever. That happens when Democrats are in charge. The dynamics of how corporations and regulatory agencies interact, however — that’s not going to change, except to be in more favor of companies demonstrating an ability to comply with the law.
The Cultural Change
What concerns me more isn’t what the Biden Administration will bring us, but what the Trump Administration will leave behind.
We would do well to note that while Trump lost the presidency, his campaign did exceptionally well and the Republican Party held its own in Congress. Trump got more votes this year than he did in 2020. His political base demonstrated not just enormous loyalty to Trump, but enormous resentment to anyone who opposed Trump.
Political reporters have noted that dynamic all year long: that even in state and local races far removed from national politics, the battles ultimately reduced down whether or not a candidate supported Trump. (The New York Times had a great example of this from Montevallo, Alab., population 6,700.)
Well, what replaces that spiteful imperative once Trump departs from office? My fear is that we’ll continue to see Trumpism without Trump, where the motivating factor is just hatred of the other party.
If you’re a large corporation trying to serve all political tribes in this country, that’s going to be difficult. You’re always going to piss off at least 40 percent of the country. That’s been true since Trump arrived four years ago. My fear is that this will now be a permanent condition.
How many times over the last four years did we see large companies roasted on social media because they were either working with the Trump Administration or not? Too many to count, in my estimation. Absent Trump himself, will the public’s tendency to view corporate ethics and actions through the political lens recede? Or will the public just let their overall partisan political loyalties step into Trump’s shoes?
I don’t know. But given our propensity to exercise moral judgment so righteously on social media, and the ease with which corporate stakeholders can find political paisans to do that — to forge alliances and then hold companies accountable to our own sets of ethical standards, right or wrong — I fear that while Trump himself is finally leaving, the damage he did to this country is not.