Compliance Blog

Posted by Anthony Demangone

Happy Valentine's Day, everyone.  Here's a few items that I'd love to share with you.

Where's the love?  It isn't uncommon to hear credit unions complain about regulators.  But it does catch your attention when you hear those complaints from other regulators. The American Banker had a fascinating article  (American Banker) in which state banking commissioners make a series of stinging comments against federal banking regulators.  Read the article, but here are some of the quotes that caught my eye.

"I don't necessarily disagree with some of the things [federal regulators] are saying, but they are using a sledgehammer to kill a gnat," said Mississippi Banking Commissioner John Allison....

Some state commissioners are refusing to sign enforcement actions initiated by the Fed or FDIC, saying they are simply too severe. This is not a frequent occurrence, but it is happening.

"Whatever you have to say as a state regulator really doesn't matter," said Tom Gronstal, who just completed nine years as Iowa's banking commissioner....

"Field examiners feel threatened. They feel like their jobs are in jeopardy if they vary from anything that Washington says to do," said Allison, who has worked at the Mississippi department since 1972 and been its commissioner since 2000. "No matter how great Atlanta is, Washington is going to have the final say-so."...

Joe Face, who has worked at Virginia's Bureau of Financial Institutions since 1979 and been the commissioner since 1997, said this approach is hamstringing talented bankers.

"Good bankers can usually work their way out of problems, but they are not able to do so in many cases because the regulatory approach is impeding their abilities, particularly when it comes to the lending function, which is slowing economic recovery," Face said. "Many community bankers perceive elements of unfairness, secrecy, prejudgment and unwarranted criticism in remarks and actions by regulators."...

Wow.

Roses are red.  Violets are blue. When it comes to auditing firms, the FDIC is more likely to sue.  Here's a very interesting post  from the Bank Lawyer's Blog that discusses how the FDIC is looking into lawsuits against auditing firms involved with failed banks.  I'll let you read the post, but I will say this.  If I were an auditing firm (or other professional firm working with financial institutions) and I learned about this increased litigation risk, I'd take a much firmer stance with my clients.  

No love for Mr. Snyder.  If you are a fan of the NFL, you may know about Daniel Snyder's (the owner of the Redskins) decision to sue a newspaper that published a column that was anything but flattering about the Redskins owner.  I won't get into the merits of the article, or whether Mr. Snyder's lawsuit had merit.  But this blog post is a huge reminder of crisis management and reputation risk.  In short, the post notes that the article that led to the lawsuit was written in November.  Internet traffic to that website had all but stopped...until the lawsuit.  After the lawsuit, the column and the newspaper have received more attention than it ever had before.  

Housing.  President Obama announced his plans for winding down Fannie and Freddie, and for reforming the housing finance market. NAFCU responded on Friday, voicing our concerns to Secretary Geithner that credit unions must have a viable secondary mortgage market - and one that we can access without problems. 

NCUA board meeting. NCUA released the agenda for this week's board meeting.