Academic journal article ABA Banking Journal

Is It Compliance or "Regulatory Management"?

Academic journal article ABA Banking Journal

Is It Compliance or "Regulatory Management"?

Article excerpt

Is it compliance or "regulatory management"?

Tired of the regulatory burden? What would you tell a member of Congress who was dropped in front of you and had to listen? We put that question to a roundtable of compliance experts. Here's what the bankers, members of the 1988-89 ABA Compliance Division Executive Committee, came back with:

"I'd say, `Come to work with me for a week, and see what it takes to implement the regulatory requirements you're imposing on the financial industry'," says Jeffrey T. Paul, vice-president and compliance officer, Sovran Financial Corp., Norfolk, Va. "If they came, they'd see the time, costs, and people it takes."

David T. Wittman, vice-president and manager, Chase Manhattan Bank, N.A., says he'd want Congress to weigh the costs of proposed laws against the expected benefits. And he'd ask that "sunset" provisions be built into new laws affecting banks.

Regulation CC, which implemented the Expedited Funds Availability Act, is a good example of the problem, he explains. Studies show that most banks now grant next-day availability, says Wittman, 1988-89 committee chairman. "So the problem is essentially fixed, but we're going to live with that regulation the rest of our careers."

Community banker Harold N. Ueker, auditor and compliance officer for First National Bank, Whitefish, Mont., would complain about unequal treatment. "So many other organizations take deposits and lend money and aren't regulated like banks are," says Ueker. "Everyone should be dealt with in the same way."

Another committee member looks at responsibilities such as taxpayer identification number compliance and says he would complain about that. "There are many instances where banks are required to be police officers," says Cliff E. Cook, vice-president and compliance officer at Puget Sound Bank, Tacoma, Wash. "I think there needs to be some backing off."

Agreeing with the objections raised by Uecker and Cook, First City Bancorp.'s Karen L. Davy says there's another point she'd add. "The bottom line is that the consumer pays," says Davy, vice-president and manager - compliance. The Houston banker says the industry as a whole has to make this point to lawmakers, because an individual banker crying "poor me" doesn't draw much sympathy.

Finally, Phillips G. Gay Jr., of First Union Corp.'s regulatory compliance division, says Washington should get its act together. He feels there are too many cases where different agencies seeking the same ends - as well as Congress - come come at the same issue from different directions. "Why do we have to do the same thing three different ways?" asks Gay, vice-president at the Charlotte, N.C., holding company.

With that off their chests, we asked the bankers to address pending compliance concerns.

[This discussion took place last September during ABA's National Conference for Compliance Managers, Bank Counsel, and Auditors. Executive Editor Steve Cocheo moderated.]


At the time of the discussion, federal regulators were performing or about to perform compliance examinations in several of the bankers' organizations. In other cases they had been through participants' shops comparatively recently.

The Office of the Comptroller of the Currency had finished a compliance exam at First National Bank, Whitefish, a week before the conference. Harold Uecker found the examiners fair, but noted that they were looking at many more areas than they had in past compliance examinations. This was much as he expected, given the new approach taken by the OCC.

When Puget Sound Bank was visited for a compliance exam about 18 months before the conference, Cliff Cook noticed much more emphasis on compliance management. "It was more of a `top-down' audit," he says. (See the cover story in this issue for an inside look at an OCC compliance exam.)

Sovran Financial Corp. …

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