Compliance Blog

Posted by Anthony Demangone

For years, I've argued that credit unions should insert "compliance" into their product development process.  Rather than being a drag, I believe inserting compliance will improve efficiency.  With that in mind, read the sage advice of Bruce Collins, Corporate Vice President and General Counsel of C-SPAN.  He pens a regular column for Inside Counsel.  And his most recent column drives this point home.  While legal and compliance may not be one in the same, I think you can take his advice and apply it to compliance officers with a positive impact.

"I know I’ve failed as in-house counsel when I hear by accident about a new project or transaction of my non-profit organization. If that happens I haven’t done my job. One of the primary reasons for having and paying for inside counsel is to keep the organization on the legal straight and narrow as efficiently as possible. If the in-house lawyer is finding out about new projects only as they are about to launch, much of the advantage of being in-house is lost. You might as well be outside counsel. It’s not a good position to be in either for the lawyer or the organization..."

But Collins warns against becoming a passive "no" man or woman. 

"No in-house lawyer wants the reputation of being the Abominable No Man on new initiatives. If he gets that reputation, it is probably because he has not integrated himself fully into the operations of his only client. He is passively waiting for issues to come to him rather than actively monitoring what’s going on. That approach greatly increases the chances of having to say "no." That answer may be legally correct and thereby protect the organization, but a more engaged lawyer could have been a partner at the outset who worked to get to "yes."

The passive lawyer creates not only wasted time, money and irritated staff (including bosses), but he is also shirking his legal duties by sitting in his office. No doubt he drafted the organization’s board-approved antitrust policy requiring legal review of all new projects at their inception. He should look again at the organization’s insurance policies that almost certainly require the same kind of legal attention. And if he is lax about those obligations created long ago, he should certainly want to avoid being tagged in the regular internal or external audits his organization is subjected to. The lesson: Being a professional in-house lawyer means getting away from the desk, walking down the hall and getting engaged."

Sage advice, indeed.

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Here are a few other items of interest.

• RESPA.  HUD's most recent edition of the RESPA Roundup is now available. Be sure to forward this to your resident RESPA person.
• FinCEN.  They've released the most recent quarterly mortgage fraud report.  SARs involving mortgage fraud are up more than 7% in the period covered by the report. That could mean more fraud, or that we're getting better about finding it and reporting.  In any event, fraud seems to be a very common theme.  NCUA's Inspector General points to it, FinCEN points to it, and the SEC points to it. It seems to me that we could see some fraud-related guidance at some point in the not-too-distant future.
• Speaking of NCUA's OIG, here's their 2011 annual performance plan.  What caught my eye?  

"We anticipate at least 8 to 12 additional material loss reviews in 2011 will require a significant portion of our OIG resources."

• NCUA has released Letter to Federal Credit Unions 10-FCU-03.  The letter replaces Letter to Credit Union 150 regarding the sale of non-deposit investment products.  I'll address this in greater detail in the very near future.