The Smart Compliance Blog

The NCUA hosted a conference call last week to review “Fair Lending Examination Program and Compliance Assistance.”  The best practices that were provided are a good reminder for everyone, regardless of your regulator.  A quick review of the list will help you determine if your current activities are aligned with these best practices.

In March, the OCC, Board, and FDIC (the Agencies) requested comment on proposed revisions to “Interagency Questions and Answers Regarding Community Reinvestment.”  The proposed changes add details on how banks can earn Community Reinvestment Act (CRA) credit. Together with a speech by the OCC's Thomas Curry, they are clearly signaling change regarding how CRA exams will be conducted and how the Community Reinvestment will be evaluated. 

On February 19^th, 2013, the Justice Department announced that Texas Champion Bank of Alice, Texas, will establish uniform pricing policies, conduct employee training and pay $700,000 as part of a settlement to resolve allegations that it engaged in a pattern or practice of discrimination on the basis of national origin. According to the complaint, "the bank’s policy or practice of giving its employees broad subjective discretion in handling every aspect of the unsecured consumer loan transaction has had a detrimental impact on Hispanic borrowers compared to similarly situated non-Hispanic borrowers and is not justified by business necessity or legitimate business interests."

In our last post, “7 New Rules from the CFPB – Are You Ready?”, we provided a summary and break-down of the most recent onslaught of changes and new rules that have been pushed out to the financial community. Bank leadership and compliance professionals are struggling to stay abreast of and implement these changes. That post covered the first three rules. This post will summarize rule four and five.  

The CFPB recently published their first Annual Fair Lending Report.  Inside the report, the CFPB shares the most common Reg B violations from the CFPB, FRB, FDIC, OCC, NCUA and FCA.  

FDIC Chairman Martin Gruenberg recently announced initiatives intended to help the agency better understand the challenges facing community banks'.  The agency has committed to holding a conference early next year on the future of community banking and their impact on the markets they serve.  

Studies show that community banking has changed dramatically over the last 10 years.  The cost structure and the overwhelming increase in regulatory compliance has turned the traditional business model on it's ear.  Fair lending, CRA, and HMDA compliance alone has become a multi-billion dollar a year cost for community banks.  

"The FDIC is also reviewing key challenges facing community banks such as raising capital, keeping up with technology, attracting qualified personnel, and meeting regulatory obligations," Gruenberg said. "Additionally, we are looking at our own risk-management and compliance supervision practices to see if there are ways to make the process more efficient" for community banks. Community bankers can only hope Mr. Gruenberg is good on his word. 

 Read Gruenberg's speech  To learn more how TruPoint Partners can help you reduce your cost of compliance, please contact us today or visit www.trupointpartners.com