ABA Compliance Committee Report
 Michael A. Olson, US Bank
This meeting marked the beginning of a new era for the Compliance Executive Committee, as it welcomed three new members from America’s Community Bankers, with whom the American Banker’s Association merged on December 1, 2007. The new ABA now represents 95 percent of the banking industry’s $12.7 trillion in assets. Jeff Owen, ABA’s chief of staff, briefed the committee on the new ABA and indicated that the merged organization will provide for stronger advocacy, more resources, staff, and value for the membership.
The state of the mortgage industry and how it will impact banks was a main topic of discussion. It is a certainty that some form of mortgage reform legislation will be passed into law, most likely next spring. With this in mind, ABA took the position of working with Congress to achieve the best outcome possible, rather than simply opposing all bills and possibly losing a voice in the discussion. A bill passed by the House contains several provisions that would place greater restrictions on mortgage lending to include: registration of mortgage lenders at banks; a lowering of the HOEPA trigger; greater burden on the lender to demonstrate the borrower’s ability to repay; a loan product that is appropriate for the customer; and net tangible benefit to the customer in a refinanced loan. The ABA worked with House Financial Services Committee Chairman Barney Frank in crafting this legislation to lessen the impact on banks and direct additional oversight to non-bank mortgage lenders; however ABA is not yet satisfied with the bill and will continue to work with leaders in both houses to improve any final legislation. An ABA-opposed bill under consideration in the House would enable bankruptcy judges to unilaterally modify mortgage note agreements to include a decrease in the principal amount and interest rate. There is immense pressure on Congress to take action, especially from constituents in states with a disproportionate number of distressed borrowers, therefore banker input to the ABA and Congress is essential. To help compliance professionals keep abreast of developments on the mortgage reform efforts being developed by federal agencies and Congress, the ABA’s Center for Regulatory Compliance has created a new web page to track mortgage reform initiatives at www.aba.com/compliance/mortgage_reform.
Overdraft protection has been given a considerable amount of attention by Congress, regulators, and the media. The message conveyed to the committee was that if you would not feel comfortable explaining your overdraft protection program on the local news, your bank should examine its program.
Several CEC members expressed concern over unclear guidance on how to properly document and insure condominiums in a flood zone. The ABA will be requesting that the FFIEC issue a Q & A on this subject in the near future.
The FFIEC has expressed concerns regarding the migration of remote deposit to consumers. The concerns relate to what procedures are in place to assess risk and provide adequate controls.
The ABA is currently working on an ID Theft/Red Flags toolbox that will be made available to member banks via the website.
Most CEC members expressed challenges in the area of ‘Talent Management’. While it has always been difficult to attract and retain qualified compliance personnel, recent regulatory burdens as well as a resource shift towards credit quality have made it extremely difficult to staff the compliance function. Wayne Abernathy, Executive Director of the Government Relations Group emphasized the importance of compliance by stating that “Customers bank where they believe their assets and information are safe. Compliance personnel are guardians of the confidence that people have in banks.” Clearly, compliance can no longer be considered simply an expense, but an investment in building confidence in your bank.
Read the report in its entirety online at www.iowabankers.com.
Michael A. Olson, Community Bank President of US Bank in Pella and New Sharon, recently attended a meeting with the American Banker’s Association Compliance Executive Committee (CEC) in Washington, D.C. The CEC is comprised of fifteen compliance professionals from banks across the U.S., with community, regional, and national organizations all represented. ABA staff from the Government Relations and Professional Development Groups support the committee.
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