More than 20 years of regulatory changes have completely remade the banking landscape. With each crisis, Congress enacted a new set of guidelines specific to the problems of that era, forcing regulators to redirect their oversight of financial institutions. Some banks have adapted to new rules and requirements — but most have lagged in their response.

However, banks do have a way forward. They need to start approaching their regulatory responsibilities with the same sense of purpose they apply to effectively managing their business lines and operations.

Bankers have always known that the stakes of achieving regulatory compliance are high. But the past few years have driven that lesson home with a vengeance. In fact, banks' shareholder value is now directly impacted by investors' opinions of a bank's regulatory posture. Banks may experience a dramatic loss of market capitalization because of a regulatory whisper — no matter how insignificant.

In this climate, bankers have come to understand that regulatory decisions affect every aspect of their business, including the strategic direction of their company. So why have so many banks neglected to change their approach to regulators?

A big part of the issue is that in most banks, regulatory matters are managed by bank executives who have other responsibilities. This divides their focus. Indeed, general counsels, risk managers, compliance officers and others are being asked to coordinate a vast patchwork of regulation in addition to managing their day jobs.

Few banks appoint a single point of regulatory contact to centralize these tasks. This disorganized approach forces bank chiefs to jump in.

Overall, too many bankers view regulatory management as a cost center and not as a strategic initiative. As a result, bank executives are not coordinated in their communication with regulators, and examiners get mixed signals. Ultimately, despite good intentions, banks' approach to regulatory compliance may result in confusion, opacity and a lack of trust between financial institutions and their supervisors.

How should banks enhance their regulatory focus? While every bank is different, consider the following steps to develop a more effective approach:

1. Study the manner in which your organization connects with its various regulators, compiling a list of every area of the bank that has regulatory contact. Identify which bank executives are responsible for each area, and learn which executives are in regular dialogue with examiners.2. From this analysis, determine if the bank already has an organized approach to handling issues and a coordinated means of communicating with regulators and among all executives.

3. Consider developing a centralized group with one key executive who is responsible for regulatory communication, remediation and coordination. This group will facilitate consistent communication both within your bank as well as with your regulators. Bank executives who meet regularly with examiners will have a better appreciation for issues in other parts of their bank. And regulators will better understand strategic initiatives as a result of a coordinated approach.

As is so often the case, setting a clear tone at the top is vital in implementing these changes. When chief executives and boards embrace a unified focus on regulatory issues, organizations are motivated and regulators are impressed and even relieved.

Consistent attention to regulatory matters will build trust between executives and examiners. Complete transparency will maintain that trust, especially if banks convey good news quickly and bad news even quicker. Over time, banks can earn regulators' support of their strategic initiatives and may even cultivate their respect and regard.

Bob Hartheimer is a Washington, D.C., based regulatory consultant. He can be reached at