It is a significant comment on the state of the banking industry that
With topics like fair-lending, Home Mortgage Disclosure Act reporting,
Of course, compliance is one of the biggest challenges facing this
Major banks have long since established formal compliance policies. But
Often their managers honestly feel there is little or no problem in
When a visiting regulator asks the CEO about the bank's CRA policy, the
"We don't have any underprivileged people in town."
Or "we subsidize the loans for the few long-time residents who can't
Many bankers complain that examiners focus less on lending policies than
But such complacency is neither warranted or accepted.
Compliance is far more complex than keeping files of data on loans
As the Boston Fed pointed out in its recent and highly controversial
As an example it cited the fact that the mortgage application files of
This indicates that lending officers go out of their way to try to make
How can you be sure you're in thorough compliance? Some compliance
"Treat everyone the same way. If you want to be a curmudgeon in lending
I hope the RMA makes this sort of suggestion in addition to explaining
What makes bankers so mad when they are criticized over lending
Banks don't want to have to turn down borrowers.
For one thing, it's costly; banks spend time and effort in handling and
But bankers know that even if they earn 1% on assets, it takes the
And bankers also know that at the same time the CRA regulators want the
"Make up your minds and be consistent," the banker pleads.
Such consistency isn't likely to come soon. I hope the RMA's program
Don't expect the regulators to do the adjusting.
Mr. Nadler is a contributing editor of the American Banker and professor