Magazine article American Banker

View of Bank Regulations as Merely a Risk Factor Questioned at Gathering

Magazine article American Banker

View of Bank Regulations as Merely a Risk Factor Questioned at Gathering

Article excerpt

To most speakers at the Western League of Savings Institutions' compliance conference here last week, risk management and regulations go together like Southern California and sunshine.

However, the conference's featured speaker isn't so certain.

JoAnn S. Barefoot, president of Barefoot, Marrinan & Associates consulting firm in Columbus, Ohio, said items like the Community Reinvestment Act and Bank Secrecy Act need to be seen as potential profit opportunities, not just as risks to be controlled.

"Compliance is being swept up in a risk management focus," Ms. Barefoot said in her keynote speech last week. "But I think that it's always going to fit uncomfortably in this area. Compliance isn't only about risk. It's also about creating business opportunities."

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The new Community Reinvestment Act rules don't require it, but a Federal Reserve official said bankers should generate their own demographic data to make their exams easier.

By developing the performance context - an in-depth study of the demographics of its community - a bank can help ensure its lending results are judged properly, said Joy Hoffman-Molloy, community affairs manager with the Federal Reserve Bank of San Francisco.

She emphasized banks don't have to provide the demographic data because the new rules place that burden on examiners. But Ms. Molloy said that an institution is missing a chance to help itself if it doesn't do its homework.

"Making your own performance context means that you can look at what the examiner has and argue it," Ms. …

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