Tired of being seen as the bad guys, James Defrantz and Wes Ware decided to make the leap from regulators to bank consultants.
"I had worked for three different regulators. The time came for me to go out and say those famous words 'we are here to help' and really mean them," says Defrantz, borrowing from the old Ronald Reagan line about the most dangerous words in the English language.
Defrantz has worked in various capacities for the Office of Comptroller of the Currency, the now defunct Office of Thrift Supervision and the Federal Reserve Bank of San Francisco.
CCG Catalyst said on Tuesday that Ware and Defrantz were named as managers and senior consultants in the risk and compliance practice at the bank consulting firm.
The relationship between bankers and regulators usually becomes strained during times of economic crisis, and the current climate is no exception, Ware and Defrantz say. Bankers have assailed the Dodd-Frank Act and other reforms, and they have complained that examiners are stifling lending by being too tough.
"As you go through each cycle, during the good times there is a more stable relationship," says Ware, who worked at the San Francisco and Kansas City reserve banks and the OTS. "As banks have problems through earnings or taking write downs on loans, it just becomes a more contentious arena."
This strained relationship mostly stems from mutual misunderstanding, Defrantz says.
For example, Defrantz was once sent to a bank because of confusion over whether it required spouses of borrowers to sign for loans. A loan officer had said yes in reference to a particular loan, but the examiner thought the reply meant the bank always had spouses sign. That would have been a regulatory violation and prompted a review of the bank's loan portfolio and procedures.
"A person may answer honestly but not accurately," Defrantz says. "That can take someone to winnow down the question to help the bank understand."
At CCG Catalyst, Ware says his clients are mostly looking for advice on problems with appraisals and allowances for loan and lease losses. Defrantz says his clients are concerned about fair lending practices and rules for foreclosures on veterans.
"Change is inevitable so embrace it," Defrantz advises his bankers. "There is no point in arguing or being disgruntled. Just use it to enhance your business."