WASHINGTON -- Robert P. Chamness is the compliance "answer man" for bankers across the country.
As executive vice president and general counsel at CFI Proservices Inc. in Portland, Ore., Mr. Chamness dishes out how-to information on every federal law and regulation as well as rules in the 50 states. He has written 20 books on everything from Truth in Savings to Americans with Disabilities Act.
CFI sells a software program that tells banks which state and federal laws and regulations apply to which products. The program leads the banker through a series of questions that ensures compliance. Then the computer generates all the forms needed under each law, such as customer disclosures.
Wide RAnge of Clients
CFI Proservices claims 2,500 banks as clients. The company was founded in 1978, has 170 employees, and annual sales near $25 million.
"Our clients run the gamut from some of the very biggest to some of the very smallest," says Mr. Chamness.
Some banks use the software to keep employees from deviating from the bank's policies. "Some big institutions really do want that kind of control," Mr. Chamness explains. "For some of the small banks, it really is a security blanket, so they know they are doing it right."
Mr. Chamness is popular with compliance officers, in part, because he has a knack for making complicated things simple, even entertaining.
"Compliance is the monster under the bed. It is a constant worry. What we want to do is control that monster," Mr. Chamness told compliance officers in a speech this summer.
To help banks avoid compliance trouble, he has compiled a list of red flags.
Five Warning Signals
Red Flag No. 1: Compliance officers should not report to product managers or department heads.
"Compliance, if it is truly going to work its function, needs autonomy and independence from the products and services that the bank provides," Mr. Chamness explains.
Management wants income and the profit motive is an instant conflict of interest for compliance, he advises.
Red Flag No. 2: Adequate resources must be allocated to compliance and training.
Compliance is not a part-time job or one that can be done by committee, Mr. Chamness adds.
"No one knows who really handles what and there is too much to do for one person," he says. This sets up the "empty chair defense ... whoever isn't there, it was their fault."
Compliance is always going to be a drain on a bank's revenues. Management must be convinced that compliance can save the bank money.
Red Flag No. 3: Compliance officers need authority and access to top managers.
Without senior-level titles and access, Mr. Chamness says, the compliance officer's job is twice as hard. The compliance officers also needs to be included in major decisions before they are made. "Compliance is everybody's job. If it's not there are going to be failures."
Red Flag No. 4: The bank needs to operate in a safe and sound manner.
Banks with safety and soundness problems are likely to have compliance problems. "They go hand-in-hand," he says, because a bank with supervisory problems cannot give compliance the attention it needs.
Positive Attitude Needed
Red Flags No. 5: Fix mistakes the first time.
Repeat violations show a lack of attention to compliance, according to Mr. Chamness. It means either the bank doesn't know what it's doing wrong or doesn't care. Recurring problems means there is a lack of training or follow through or both, he said.
Mr. Chamness sums up the positive attitude bankers need to handle compliance successfully: "It doesn't get in the way of business, it just prescribes how business must be done."
Robert P. Chamness
Age: 40 Birthplace: Crawfordsville, Ind. Home: Portland, Ore. Education: BA in political science, Wabash College, Crawfordsville, 1975 JD, Indiana University School of Law, 1978 Title: Executive vice president and general counsel at CFI Proservices Inc Experience: Fifteen years representing financial institutions on state and federal compliance issues Family: Wife, Sandy, a sales director for Mary Kay cosmetics; son, Christopher, 9; and daughter, Katherine, 4 Drives: Lexus 400 S Favorite travel spots Southern France. "Hawaii is a good backup" Reading: History, and all of the novels by fellow lawyer John Grisham