Would You Take This Pledge?
Whether you consider compliance to be as boring as watching Lawrence Welk reruns in your grandmother’s Florida room (a real life nightmare for those of us of a certain age) or as exciting and cutting edge as Beyonce’s release of her latest album exclusively via social media (a watershed event that all you marketers should be studying today), you’re involved with your credit union’s compliance efforts whether you want to be or not. The attitude you bring to these efforts will be a direct reflection of the importance that your boss and boss’s boss place on doing things the right way. Think of it this way: How well do you think the healthcare.gov website would be working today if President Obama thought his election depended on it? My guess is pretty darned good.
The problem is that too much of an emphasis on compliance can lead to a fear of innovation and ultimately a paralysis of decision-making. Also, let’s be honest. Compliance cost money even as it ends up saving your credit union money in the long run.
So, how do we incentivize CEOs to do more than pay lip service to compliance while at the same time making sure that compliance concerns don’t overwhelm a credit union’s operations? Recently, the final Volcker Rule addressed this problem by requiring CEOs to attest to the fact that their banks have a program in place to comply with the regulation. Even though similar provisions have been in place under the Sarbanes-Oxley Act for more than a decade now, the surprise inclusion of this provision in the final draft of the rule has been met by CEO grumbling and talk of potential lawsuits.
Let’s give the big, bad bankers a break and turn the question on ourselves. Should CEOs of credit unions have to affirmatively swear that they have the appropriate compliance program in place for key regulations such as the CFPB’s mortgage lending rules or maybe even the Bank Secrecy Act.
Keeping in mind that the opinions I express in this blog are mine alone and do not necessarily reflect those of the Association, I believe the time has come for credit union CEOs to take the same kind of pledge.
First, as lame as some of our regulations are, many of them are vitally important to the safety and soundness not only of your credit union but to the industry as a whole. Second, I believe the vast majority of credit unions do a great job of complying with regulations in good faith. They shouldn’t be disadvantaged by having to compete against financial institutions that pay lip service to compliance but don’t invest the resources or time it takes to actually comply with basic rules. Finally, compliance starts at the top. Everyday someone in your credit union is deciding whether an issue they are dealing with warrants a call to the credit union’s attorney or at least a check-in with the person responsible for its compliance. The importance of that decision will be underscored if the person making it knows that he or she is implementing a regulatory requirement to which the CEO will ultimately attest.
Isn’t this just an invitation for lawsuits? It doesn’t have to be. The regulations can be crafted to specifically deny a cause of action against CEOs. Have a nice day and on a totally unrelated note, am I the only one a little concerned that our leading emissary to nuclear armed North Korea and its young despot is none other than former Detroit Piston and Chicago Bull Dennis Rodman.