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Speakers Focus on Compliance and CFPB

By: Bill Poquette

Compliance issues were front and center at the Annual Management and Directors Conference & Trade Show of the Nebraska Independent Community Bankers last month in Lincoln. And leading off the discussion was Barton Shapiro, senior advisor, community banks and credit unions, for the Dodd-Frank-spawned Consumer Financial Protection Bureau. His goal, it appeared, was to convince a skeptical audience that it had nothing to fear from his agency.

“We want a lot of input from industry and consumer groups,” he said. Among other things, the CFPB will weigh the effects of its rulemaking on small business, including financial and regulatory implications. Describing his own area of the CFPB, focusing on community banks and credit unions, he said, “We are the door to the bureau. We want to get information out to you and we want input from you. The door swings both ways.”

In response to a question from the audience about plans to require escrow accounts maintained for five years on all home loans, Shapiro said mortgage servicing is one of the agency’s early priorities and there will be time to comment. “It will be an informal process at the beginning,” he said, “which shows we want input so we can have accurate proposals to put forward.”

In a session labeled “Hot Topics in Compliance,” David Dickinson, president of Bankers Compliance Consulting in Central City, Neb., said about the CFPB, “We just don’t know a lot yet. We’ve got the trunk of the tree but we don’t have the branches, which are the regulations. I can’t get answers from the bureau; they don’t know what they are doing yet.

“I’m hoping we will all be singing from the same sheet of music,” he said, explaining that currently dealing with the various federal regulators is difficult because they see things a little differently. Dickinson acknowledged that as a compliance consultant he is going to make “a lot of money” from the Dodd-Frank Act. “That is wrong,” he said.

Bearing down on current compliance issues, Dickinson advised the NICB members to make sure their compliance officers are familiar the various regulatory guidances on overdrafts, including the 2005 joint guidance, the 2010 FDIC guidance covering more than six overdrafts in one month and the FDIC FAQS issued on April of this year. The Office of the Comptroller of the Currency came out with a proposal in June but it is still in process, according to Dickinson.

In terms of OD policies, Dickinson advised clear disclosure; evaluating each customer differently; providing options; setting limits and limitations; and monitoring and managing customers and their access. He also encouraged paying overdrafts in numerical order, not the largest to smallest or smallest to largest.

Independent Community Bankers of America Vice Chairman Bill Loving, president and CEO of Pendleton Community Bank in Franklin, W. Va., looked at some of the positive aspects of Dodd-Frank, saying its greatest achievement was drawing a bright line between community banks and the big banks largely responsible for the recent financial crisis. “Policy-makers at the highest level now know who we are and seek our input,” he said. Other pluses for community banks are the changes in FDIC assessments, the $10 billion cutoff for direct CFPB supervision, making permanent the $250,000 insurance ceiling and grandfathering trust preferred securities. Among ICBA’s priorities in the coming year, he said, are the Communities First Act, the definition of a qualified residential mortgage, and credit unions’ quest for more business lending authority.

Closing his remarks on a positive note, Loving promised the economy will get better. “I see a bright future for community banks,” he said.

If the Nebraska bankers were in need of a motivational concept, they got one from Kevin Kush, head football coach at Boys Town High School in Omaha. Suggesting that they view staff members as pieces of a jigsaw puzzle, the characteristics to look for are these: believes in the team concept; exhibits selfless behavior; respects everyone; handles adversity; adapts to change; accepts feedback; demonstrates high energy; and is accountable.

Suggesting an inward look for the NICB members Kush said, “Never underestimate the impact you have on other people when you are playing a role on a team.”

Bill Poquette is editor-in-chief of BankNews.

Copyright (c) December 2011 by BankNews Media.