Here's what President Obama said on passage of the Dodd-Frank Financial Regulation Act:
“Over the past two years, we have faced the worst recession since the Great Depression. ... For years, our financial sector was governed by antiquated and poorly enforced rules that allowed some to game the system and take risks that endangered the entire economy. ... Firms ... placed massive, risky bets with borrowed money.”
Sounds like most construction companies, public and private owners, and of course almost all banks.
If A/E/C professionals really considered all the risks each morning before getting out of bed, we still would be living in caves.
On the other hand, a dependable view of actual risks is a necessity of long term success. Contractors who repeatedly bid based upon expectations of beating up on desperate subcontractors eventually run out of victims.
Ditto banks that finance projects based on “promises” and not verifiable accounting facts.
The 2,300 odd pages of Dodd-Frank only set the stage for the promulgation of a multitude of regulations by a myriad of new agencies.
I would expect many of these new regulations to require far more verification of accounting data. Projections of return on investment will be required to be scrutinized much more carefully by bank officers
But will the timetables of these proposals continue to be accepted based solely upon the hopes, dreams and promises of potential borrowers? Is it not time that financial institutes require a proper CPM, with periodic updates, as well as a detailed budget, and periodic provision of paid invoices, to continue capital outflows?
Perhaps some of the 300 or so agencies involved in providing the new regulations will consider issues of time as well as transfer of cash in assisting our financial sector understand and deal with issues of risk.