ABA Banking Journal - September 2007 - (Page 4)

Editor’s Column WILLIAM W. STREETER Editor-in-Chief Banking ABA JOURNAL USPS-544-030 SEPTEMBER 2007 VOL. XCIX, NO. 9 Editorial and Executive Offices: 345 Hudson Street, New York, N.Y. 10014-7115 Phone: (212) 620-7210 Fax: (212) 633-1165 E-mail: ababj@sbpub.com Internet: http://www.ababj.com Published monthly for the American Bankers Association by Simmons-Boardman Publishing Corp. and copyrighted 2007 by ABA; Edward L. Yingling, President, 1120 Connecticut Ave., N.W.,Washington, D.C. 20036, (202) 663-5000. Title registered in U.S. Patent Office. With the exception of official Association announcements, the American Bankers Association disclaims responsibility for opinions expressed and statements made in articles or advertisements published in ABA Banking Journal. Beyond “enough!” WE DEFY ANYONE TO READ THIS month’s Compliance Clinic and not hit themselves on the head and say, “What’s going on here?” That’s not meant as a criticism of the column or its author, nor of the other talented people of the compliance community who do their best to guide their institutions through the regulatory morass. It is a reaction to decades of stultifying rules. We could easily fill each issue cover to cover with compliance articles and still not scratch the surface. This month’s Clinic is an expanded discussion of Regulation B (equal credit opportunity). Not the reg in its entirety—that would take a book—but a single sentence from an earlier issue that set the compliance fraternity abuzz. It had to do with when a lender has to provide an applicant with an adverse action report, differentiating between loan “type” and “terms.” Reg B requires a lender to give specific reasons why an applicant was turned down. The column requires a page and a half to discuss the point. Stuff like this occupies the time of thousands of people in the industry. The cost includes salaries, consulting and legal fees, frequent changes required in forms and/or systems, etc. Perhaps the biggest cost, not easily definable, but very real nevertheless, is the opportunity cost of having so many intelligent people spending their energy on minutia. Some of them no doubt enjoy the work and feel it is important. The underlying principles are important. The problem is that to implement these principles—Reg B in this case—in the complex and competitive business of lending, requires a group of people, few of whom have likely ever made a consumer loan, to anticipate every possible situation and write rules for them. That is why we end up with references to “12 CFR 202.2(c)(2)(v)1,” and then lengthy “commentary” to explain what they mean, and articles to interpret the commentary, and on and on. All this to implement the requirement that if a lender turns someone down for a loan, they have to tell them why, specifically. This is just one small part of one compliance regulation, of which there are dozens. It doesn’t even consider such things as Sec. 404 of the Sarbanes-Oxley Act, or the Bank Secrecy Act. Some would argue that the rules, and the army required to parse them, are better than having examiners make subjective assessments. A tradeoff, in other words. We’d argue that there is always subjectivity anyway. Meanwhile the rules cumulatively end up hardening the arteries of a vibrant industry. But really, you may ask, what can be done? Here are a few suggestions. • Help to elect people who understand that more legislation and more rules are often counterproductive. • Don’t let professional consumer activists go unchallenged. • Don’t rely on your trade associations to make it all go away. They can’t. The best cure for overregulation is to prevent unnecessary or poorly crafted laws from passing to begin with, but the professionals need your involvement and support to do that. • Respond to requests for comment. Rarely do the regulatory agencies get many comments—they do make a difference. • Do the right thing. The more we all do that, the less pressure will there be for fixes. Most laws result from a few bad actors. The industry needs to figure out other ways to deal with those folks so that Congress doesn’t feel like it has to ride in and right the wrongs. bstreeter@sbpub.com Editor-in-Chief Executive Editor Senior Editor Editorial Assistant Art Director Associate Art Director Art Production Manager Contributing Editors Leslie T. Callaway Lucy Griffin Kenneth Kehrer Lisa Valentine Advisory Committee Jeffrey S. Owen Production Director Circulation Director Publisher William W. Streeter bstreeter@sbpub.com Steve Cocheo scocheo@sbpub.com Lauren Bielski lbielski@sbpub.com Andrea Rovira arovira@sbpub.com Wendy Williams wwilliams@sbpub.com Phil Desiere pdesiere@sbpub.com Todd M. Blanchard tblanchard@sbpub.com Ed Blount Nancy Derr-Castiglione Karen Kahler Holliday Bill Orr Edward L. Yingling Virginia Dean Mary Conyers-Brown mbrown@sbpub.com Tom Leader tleader@sbpub.com Gus Blumberg gblumberg@sbpub.com Subscriptions: Call 1-800-895-4389 or write to: Subscription Dept., ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010 Subscription rates: One Year: Commercial Banks/Holding Companies FREE to qualified subscribers in the US; Commercial Banks/Holding Companies (Canada) $35.00; Other Businesses (U.S. & Can.) $50; Foreign (Air Mail) $295 Two Years: Commercial Banks/Holding Companies (Canada) $60.00; Other Businesses (U.S. & Can.) $90; Foreign (Air Mail) $555 Single copy rate: $18 (U.S. & Canada); $75 (Foreign) : Reprints: PARS International Corp. phone: 212-221-9595 / fax: 212-221-9195 e-mail: SBPCreprints@parsintl.com. : Research: full text of ABA Banking Journal is available on Nexis, a proprietary electronic database http://www.nexis.com. ABA Banking Journal (ISSN 01945947, USPS 544-030) is published monthly by Simmons-Boardman Publishing Corp., 345 Hudson St., NY, N.Y. 10014-4502. Periodical Class postage paid at New York, N.Y. and additional mailing offices. Canada Post Cust. #7204564; Bleuchip Int’l, PO Box 25542, London, ON N6C 6B2; Agreement #41094515. POSTMASTER: Send address changes to ABA Banking Journal, P.O. Box 10, Omaha, NE 68101-0010. 4 SEPTEMBER 2007/ABA BANKING JOURNAL www.ababj.com/subscribe.html http://www.ababj.com http://www.nexis.com http://www.ababj.com/subscribe.html

Table of Contents Feed for the Digital Edition of ABA Banking Journal - September 2007

Contents Editor's Column Briefing: Why Money Sense is a Top Priority Briefing: Sleight of Mind Briefing: Snapshot: What the First Half Tells Us About the Second Half Briefing: ABA Resources ABA Chairman’s Position Briefing: Get Away and Get Ahead: ABA's Banking Leaders Forum Community Banking: Trim the Fat: Winning the "Battle of the Buck" Community Banking: Pass the Aspirin Cover Story: Meeting the Challenge of the "Unbanked" Bank Marketing: Don't Miss the Boom! On the Job: Time to Power Up Your Presentations? Insurance Sales: The Art & Craft of Cross Selling Tech Topics: The Price is Right? Tech Topics: Security: Protect Information First Tech Topics: Hackers for Hire? You Bet'cha Tech Topics: Case in Point: Tellers Scan, Too, at First Federal Compliance Clinic: Adverse Action Clarified The Economy Banker’s Mart To Advertise/Index of Advertisers

ABA Banking Journal - September 2007

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