Stop Drowning Us: ABA Community Bankers Council Chairman Bill Grant Says Compliance Even Has "Tweener" Banks like His Struggling to Rise above the Flood
2012; American Bankers Association; Volume: 104; Issue: 2 Linguagem: Inglês
ISSN
0194-5947
Autores Tópico(s)Finance, Markets, and Regulation
ResumoEvery winter, Maryland banker Bill Grant joins other hardy souls at nearby Deep Creek Lake and, stripping to his bathing suit, jumps in. This manic act, done for charity, isn't an endurance contest. You plunge in, turn blue, and out, says Grant, 58. But it does provide an interesting contrast with his banking life. Grant and his fellow plungers have the sense, when they find themselves up to their chins in ice-cold water, to move. However, when Grant, chairman of ABA's Bankers Council, finds himself and his bank up to the neck in compliance duties, he and fellow bankers can't just get out. They have to sit there, steeping, hoping they won't drown. The environs of Oakland, Md., headquarters of Grant's First United Bank & Trust, have another Washington connection dealing with water. The northern branch of the Potomac River--the same river that flows through the nation's capital--starts nearby. So, Oakland, in the extreme western corner of Maryland, sends Washington a steady flow of pristine mountain spring water from its rural environs, via the river. Washington returns the favor by sending back an increasing flow of toxic regulation and compliance duties. Some deal Understanding a widespread frustration Grant, chairman, president, and CEO, holds the unusual distinction among community bank CEOs of having been his bank's first compliance officer. Grant didn't begin in Compliance. A lawyer by training, his first love--which continues--is with trust and estate work. He and First United's chief financial officer, Carissa Rodeheaver, came up through Trust. As a trust officer, he was given the compliance job because of his law degree. He says of the added work, didn't take me an hour a week. But increasingly, compliance has been taking a toll on his bank's business, beginning long before the Dodd-Frank Act came on the scene. Costs come two ways: expenses and lost opportunities. Grant says $1.4 billion-assets First United spends an estimated $3 million a year on compliance costs, and that's not even counting an estimate of Dodd-Frank's eventual impact. As an example of the second issue, lost business, he points to the bank's decision a few years back to stop making mobile-home loans. Under amendments to the Home Owner ship and Equity Protection Act, the bank found that its mobile-home loan program fell under the predatory classification. Grant disputes that--the loans presented a higher risk to the bank, for which, he says, it charged a slightly higher rate. [ILLUSTRATION OMITTED] [ILLUSTRATION OMITTED] We just stopped offering mobile-home loans, says Grant. And when you look at how many of our branches are in Appalachia, where mobile homes are a viable housing alternative, that's discouraging. Dodd-Frank issues over the horizon worry Grant too, especially the introduction of Unfair and Abusive Acts and Practices (UDAAP). Community bankers have a long tradition of serving their communities and their customers, points out Grant. Deceptive practices are not part of this tradition. In addition, there is an array of laws and defined regulation already out there to protect customers. Dodd-Frank does not define what practices may now fit within UDAAP. Rather, it is left to the Consumer Financial Protection Bureau to define and implement these new rules. The onslaught continues. Many banks are struggling with their economies, says Grant, but it is compounded by the ways the regulations have been written. It is a massive burden to small community banks. I fear that the burden may cause some to evaluate options they might not otherwise consider. Running a tweener Grant has more thoughts on the bank-regulator relationship, they're best appreciated in the context of his bank's operations. First United is the result of a series of mergers and de novo branch growth over decades that saw the original First National Bank of Oakland expand from Garrett County, Maryland's westernmost section, to serve four counties in that state and four more in West Virginia. …
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