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service dealings. Remember that the CFPB has absolutely no

safety and soundness authority. The other prudential banking

regulators (FDIC, FRB, OCC and our state banking regulators)

maintain that their supervision priorities have not changed.

They reiterate, among other things, that their mission to ensure

safe and sound bank operations includes enforcing compliance

with laws. In that context, they also protect consumers. If you

look closely, you will see the major shift in the agencies’ ap-

proach to consumer compliance supervision.

We no longer live in a world of compliance examiners

isolated in separate supervisory divisions with separate site

visits and reports focused on listings of random violations

identified in intense transaction testing. Gone are the days of a

silo approach with different regulatory teams that rarely com-

municate with each other, each focused solely on compliance,

information technology, or safety and soundness. The holistic

approach to bank supervision focuses on advancing sound risk

management at every level and angle within our banks. Our

regulators transitioned during the 1990’s to a risk-focused ap-

proach that gauged bank performance on how the institution

managed its overall risk, from reputation risk, credit risk, and

asset liability management risk to legal and compliance risk.

Our industry recognized that violations were much more than

a scoreboard for isolated laws and regulations. Compliance

violations are indicators for the bank’s overall risk profile. All

of our regulators have joined the CFPB in advancing the role

of financial institutions as financial stewards of consumers.

As the supervisory disciplines have merged forces, you can

no longer get a good CAMELS rating without strong compli-

ance management. We have to use violations as breadcrumbs

to lead us to the areas where unsafe and unsound banking

practices remain, threatening our infrastructure. Effective

leaders of a bank cannot relegate compliance to the back of the

bus, the last step, almost an afterthought, in the business of


Our challenge is to strengthen our risk management

program, allowing us the privilege of continuing to serve

our communities. We must embrace the heightened focus

on consumer compliance risk and execute successful exams.

Incorporate consumer risk filters into operating controls to

strengthen our compliance program’s effectiveness, always

keeping customer value and benefit as our priority. Be sure to

carefully consider any vulnerable market groups to help iden-

tify opportunities to strengthen products and services offered

to our young, our elderly, to our students and to the men and

women serving proudly in our military. Administering our

risk management program in this way will reduce our compli-

ance, legal and reputation risks!

A tough, resilient risk management helps us to operate

profitably by avoiding enforcement action, regulator required

restitution, legal defense, or civil money penalties, Positive

consumer compliance programs, robust fair lending standards,

and favorable UDAAP and CRA ratings allow you to grow,

acquire, merge or maintain in the manner of your choosing,

not of your regulator’s selection. Fewer violations and recom-

mendations warranting management attention leaves you with

more valuable time for business strategy. A consumer-centric

risk perspective greatly reduces risk of customer complaints

triggering aggressive, perhaps even antagonistic regulatory


Fortunately, there are many benefits to our community

bank philosophy, to embracing compliance as the key ele-

ment of our entire infrastructure. Our franchise value will be

increased by a customer-centric culture fostering attractive

consumer products and services. Proactive identification and

meaningful response to consumer needs and complaints yields

long-term loyalty and word-of-mouth referrals. The potential

for negative press is minimized and reputation strength is

enhanced, strengthening our competitive advantage. In short,

we get to keep on keeping on. We get to be the community

stewards we want to be, to strengthen our communities and

our families.

Nobody ever said life was going to be fair or easy. With

so many voices crying “foul” and “foe,” we simply have to

withstand the criticism, evolve where necessary and dig deep

into our inner strength. Stop and take a quiet moment to

pull a dollar bill out of your wallet. Take a long look at those

words, those symbols depicting our country’s birth and evolu-

tion of freedom and opportunity. The Great Seal of the United

States is comprised of an unfinished pyramid and the eye in a

triangle on the reverse side. The Egyptian pyramid is a symbol

of strength and duration; the 13 steps indicate the original

number of U.S. states; and the 13 steps leading to an unfin-

ished summit indicates future growth of the nation. The eye is

known as the “Eye of Providence” and is surrounded by rays

of light. Our forefathers intended that we lead with skill and

wisdom in management. They created a symbol and placed it

on our currency to remind us of our birthright as Americans.

We as community bankers, a special breed in the wonderful

melting pot of Americans, simply need to stand firm, honor

our forefathers and those who have given us this opportunity

with their very life, and do what we do best. Take care of our

communities. Carefully and thoroughly learn the laws and the

rules that we must follow to maintain our important spot in

the financial infrastructure of our great country. Continue the

stewardship of our neighbors’ finances. Root out the people

that seek only to harm and to pillage.

Our challenge is to strengthen our risk management program, allowing us

the privilege of continuing to serve our communities. We must embrace the

heightened focus on consumer compliance risk and execute successful exams.