WASHINGTON - Lucy H. Griffin blames baby boomers for the regulatory burden.
Ms. Griffin, a compliance consultant with over 18 years of regulatory experience, said the flux of banking legislation was caused by the entry of baby boomers into the workplace.
"Compliance has been generated by consumer demand," she said. "And baby boomers enter adulthood with the idea that they can change things."
Ms. Griffin, who until recently managed the American Bankers Association compliance division, now travels around the country giving compliance seminars and working with banks to improve their Community Reinvestment Act ratings.
She said that the boomers intrinsically have the right idea: Consumers are vital in any business, and change is not only accomplished by those in Washington.
Few Bother to Comment
In fact, one of the things that bothers Ms. Griffin most about bankers is that few write public comment letters. Writing letters on proposed legislation is one of the most concrete ways in which bankers can have an effect on regulatory burden, she said. "You either take the time to comment or you live with what comes out," she said.
Ms. Griffin said only about 1% of bankers write in. Their excuses, she said, are either that they don't have time to get involved or they don't know what to include in the letter. When Ms. Griffin teaches bankers how to write these letters, she gives three main bits of advice:
* Choose to write about those parts of the proposal that you are really interested in. You don't have to write about everything.
* Don't just focus on the problems you have, support what you like in the proposal as well - or you may lose that part.
* Give factual information about your bank and your town so regulators can see how your suggestions would or would not work.
Commonly Asked Question
When she speaks to an audience of bankers, the one question she is asked most often is, "How can I comply with regulations and still be customer friendly?" Disclosing what is necessary without confusing or intimidating people, she said, is often a challenge. Although it sounds simple, Ms. Griffin suggests bankers explain to customers that the government has strict requirements.
Every bank, she said, should prepare a packet containing information on all the loans they offer. The material should include the name and number of a bank employee whom the customer could call with any questions. That way, anyone at the institution could hand out the packet. While being customer friendly, said Ms. Griffin, the bank would simultaneously meet disclosure requirements.
"It never hurts to give out too much information," she said.
Automation Advantage
Quite a few big banks use the packet idea now, Ms. Griffin said, but smaller banks tend to try to customize, giving people just what they ask for. That approach is not always such a good idea, she said, because customers are often not sure what is available. "The more a small bank can automate, the safer they are," said Ms. Griffin.
It is also important to remember that compliance has been generated by consumer demand, she said. "The thrust of compliance is to empower the consumer."
In every bank she has audited after a poor CRA exam, Ms. Griffin has seen the same four problems:
* An overwhelming load of work for a small number of employees, especially at small banks.
* The idea that compliance is the job of one person or one department in the bank: "Just as everyone in the bank has a safety and soundness role, everyone should have a compliance role," she said.
* Procedural problems: Banks have to take each regulation separately and break it down, she said.
* Poor documentation: Because of the burden, she said, banks are working harder with fewer people. But they still need to get that paperwork done.
Similarly, said Ms. Griffin, every bank she has seen that has received an outstanding CRA rating has had the same three attributes:
* They maintained a good relationship with regulators.
* They maintained a good CRA program. That means, she said, not just working on CRA when a problem arises, but treating it as an ongoing process.
* CRA was a visible priority of senior management and the board of directors of the institution.
The difference between an "outstanding" and a "satisfactory," Ms. Griffin said, is usually a factor of how well the exam went. A "needs to improve" rating, however, means there are real problems.
