Academic journal article ABA Banking Journal

Better Prepared Than Surprised

Academic journal article ABA Banking Journal

Better Prepared Than Surprised

Article excerpt

Writing in his column last month about the pending regulatory reform legislation, ABA Chairman Art Johnson observed, "My son is the compliance officer for our family-owned bank. As I like to tell people, that puts him on the growth side of the business."

A sense of humor will be essential to keeping your sanity as the industry enters the post-crisis era.

Despite victories during the intense legislative scrum over financial reform--due to almost nonstop efforts by ABA, state associations, and their bank members--the industry will be facing new rules, new rule-writers, and possibly new enforcers. It will take time before all the new regulations are in place, but there are several important regulatory changes that are occurring right now, and need bankers' attention. Three are covered in this issue.

First, the cover story (p. 28) sounds a sharp warning about a new push to use the regulatory tool known as "Unfair and Deceptive Acts and Practices," or UDAP, first used by the Federal Trade Commission. Jo Ann Barefoot, a long-time contributor to the magazine, former regulator, and bank consultant does an excellent job of sketching out the challenge. And it's a big one. More importantly, she also lists a series of steps banks can take to avoid running into the UDAP "iceberg."

Those steps alone, however, may not be enough. "UDAP isn't about compliance," she writes, "it's about risk. …

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