Compliance officers surveyed by American Banker said fair lending rules dominate their jobs.

Thirty percent of those surveyed said fair lending was one of the top three most time-consuming regulations last year. Runners-up were the Community Reinvestment Act at 15%, and the Real Estate Settlement Procedures Act and Truth-inSavings, tied for third at 13%.

Respondents said they will spend even more time next year on fair lending, CRA, and the real estate settlement act.

Thirty-eight percent of respondents said fair lending will be in the coming year's top three, and 16% said CRA will be. The real estate act was third again, at 15%, followed by the Bank Secrecy Act, at 5%.

More Statistics Than Ever

Respondents said all exams are longer, more detailed, and more reliant on statistical analysis than ever.

But fair-lending exams, which encompass the Home Mortgage Disclosure Act, the Equal Credit Opportunity Act, and the Fair Housing Act, were singled out as the worst.

"Fair-lending concerns have dominated compliance and account for more than half my time," said one banker. "Previously, fair lending accounted for less than 20% of my time."

Another compliance officer said that the government's scrutiny of banks' lending patterns signifies "a giant leap toward Orwell's 1984."

Several bankers used the phrase "guilty until proven innocent" to describe the approach examiners are taking. Respondents said they defend against this attitude with statistics to show that the bank has been doing things right.

But fair-lending compliance can't be properly assessed by counting loans, bankers said. "It's a waste of examiner and bank time to compile statistics which are subject to interpretation," said one banker.

Eighty compliance officers were surveyed at the American Bankers Association's National Regulatory Compliance Conference in Washington this month. They provided facts about their jobs, banks, and which regulations require the most time.

That data is displayed in the accompanying tables. The compliance officers also answered essay questions, which provided the basis for this story.

Examiners are starting to use the new Community Reinvestment Act criteria although regulators have not yet determined what the final rules will look like, respondents charged.

Bankers complained, too, about inexperienced examiners making mistakes.

"We still have to train the examiners," said one compliance officer. And another advised: "The examiners are not always right - look for yourself."

They Like Their Jobs

Some of the trends noted in the survey results reinforced observations of the compliance industry in recent years. Compliance officers were generally positive about their jobs.

"Compliance has grown up," said one banker. "We are now recognized throughout all banks."

While many respondents still made negative comments about senior management's support, some said they are slowly seeing more chief executive officers getting involved.

Ironically, it's the examiners' interest in fair lending that has convinced senior managers of the importance of compliance, respondents said. That awareness helps the compliance department get more resources and employees.

The compliance world is still dominated by women relative to other areas in banking. But one female respondent said that as compliance becomes more important and more recognized, more males are making careers in compliance.

Another trend is toward incorporating compliance responsibilities into all jobs. Respondents said it is especially vital to train front-line people, including tellers, in compliance.

"Each bank employee must have sufficient knowledge and accountability to affect compliance at the front lines," said one banker. "It's no longer sufficient to have a compliance officer with technical knowledge of the regulations."

Asked which regulations they would like to change, most compliance officers picked CRA, which is currently being overhauled, and the real estate act.

Credit Allocation Feared

One compliance officer said the new CRA would mean credit allocation. He said the current law is better. "Most banks are already complying with the current CRA," he said. "Not happily, but it works. So why change it?"

The new real estate act rules garnered many angry remarks. Respondents said the rules are confusing and that the Department of Housing and Urban Development is doing a terrible job as the newest banking regulator.

"I would withdraw the current RESPA amendments and not reissue them until HUD can write a clear and concise regulation," said one compliance officer. "They're confusing, unrealistic, and overly burdensome. I don't see the benefit to the consumer."

Another banker said: "HUD needs to learn from the Fed how to write a regulation."

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