by Sage Happenstance, Hippie Compliance Officer
Brothers and Sisters,
First let me thank the dudes at GonzoBanker for letting me write a guest article for the most far out weekly banking news machine in the industry. Rushing through my brain I’ve got laws and regs and rulings and interpretations that are really making me flip out, and my malachite crystals just aren’t healing me on their own. I have to unload some of this negative energy, so I thought I’d let my words fight the good fight for me.
OK, now for the pink elephant in the corner. Yes, I’m a Hippie Compliance Officer (HCO) at a stodgy northeastern bank. It’s a cool gig, but it ain’t easy being an HCO. The Suits already think you’re half-nuts just by the fact that you’re a compliance officer. You mix in a rock-n-roll ponytail, and the sideways glances and knowing smirks across the boardroom table triple. The fact is, I look like this in real life:
Pretty much like a normal square except for the sublime ‘tail, right? But to keep up with the moving target of new laws and regulations, I have to bust this kind of pose now and then:
I take this stuff seriously, and lately I’ve had to flex my regulatory muscle quite a bit to keep up with the Bank Fuzz.
You remember – back in the day — how bummed out you felt when Phish was halfway through their first set, and you were still ticketless, roaming the parking lot and looking for a miracle? That’s about the level of ungrooviness I’ve felt lately over the state of regulatory affairs. The Man’s inability to give me a little consistent guidance is really screwing with my Chi, and nothing – NOTHING – drags me down faster than a tainted Chi.
What’s all my whining about? Well, first the new ruling about overdraft protection went into effect on July 1. From what I can tell, we don’t have to specifically disclose overdraft fees in customers’ monthly statements as long as we don’t promote our overdraft program. And then the description of what constitutes “advertise” and “promote” is as convoluted as a William S. Burroughs novel. I can see it going down in our lobbies….
CSR: “Psst. Hey Mack, you lookin’ for a little something to make sure you don’t bounce checks, but you don’t qualify for a line of credit?”
Customer: “Maybe. Why, you holding?”
CSR: “SSSSHHHHH! Keep it down. I have a friend of a friend who might be able to help you out. You sit in that chair and wait for me. I have a form or two for you to sign, and you’ll be good as gold. But you didn’t hear it from me, OK? I don’t promote this stuff; I’m just your connection.”
Customer: “Right on, I’ll be waiting here. What’s it gonna cost me?”
CSR: “Hey man, if I’m not promotin’, I’m not disclosin’. You just take what I give you and like it. Now sit there and read that brochure about our totally free checking accounts.”
This has caused some serious disagreements between The Suits at my bank and yours truly. During one of our AM riffs I just kinda casually plopped my Birkenstocks up on the table and said, “I think we should disclose the overdraft fees to The People just as a matter of course. It’s not like it’s a big secret, right?” On the other hand, The Suits thought we should quit “promoting” so we don’t have to disclose the fees. Hey, I know where the money to pay for my tabouleh comes from, but I think I’m going to have to challenge The Suits on this one, friends. If we take this overdraft privilege too far and then get sneaky about what we’re charging, The People will revolt. They won’t trust us. We can’t have that, can we? That’s just one trippy conflict going on in my mind.
Then you have the “Risk Assessment” wrinkle in every new reg. The Risk Assessment Waltz is a stop-gap dance that the Bank Heat use to stall until they can get their bureaucratic act together. They know what the regs state, but they don’t know exactly how they’re going to interpret or enforce them. This is how it goes down:
BSA? IT disaster preparedness? Double-top-secret-multifactor-single-thread customer authentication? Gotta do a Risk Assessment. (I was rapping with a Bank Cop and asked him for the definition of a “risky transaction” under AML risk assessment rules. Dude grabbed me by my brand new hemp tie and pistol-whipped me on the spot. You’d have thought I ripped off his favorite Hacky Sack.) Dudes, I’m tryin’ to stay true and fight the good fight here, but I’m not feeling any love from my regulator buds.
Now, here’s one that really has The Suits at my bank riled up. It’s been a bit under most banks’ radar so far, but back in January of this year, the combined thrift and bank regulators issued a joint release (don’t go there, dude!) that addresses concentrations of credit in commercial real estate lending. Turns out, if your construction/land development portfolio exceeds 100% of capital or your total CRE portfolio exceeds 300% of capital, your bank could be subject to the much dreaded “added regulatory scrutiny.” (And, yes, you better be doing a Risk Assessment!) With C&I lending so hard to come by now, it’s not exactly going to be a rarity to find CRE portfolios that exceed these levels. The Feds probably have a point here, but we should definitely be sweating this one out. I think we all know the, uh…hailstorm… that will fall on banks that find themselves over the limit with (subjectively defined) insufficient risk supervision practices to control and manage their CRE concentrations. Bringing me down.
You Feds have your own trip, I know, but I’m about to wig out trying to keep up with the new regs and what you expect of us. All this time trying to think one step ahead of The Man is eating into my disc golf time, and that makes me totally uptight. Even The Suits have been semi-sympathetic to my plight, and they can’t stand me.
Sorry to drop such a big neg bomb on you, GonzoHipsters, but my chakras haven’t been this out of balance since Jerry passed. Before I spilt, let me just say that I’ve molded my role as HCO to be a voice for The People. The bank, of course, has to make bread; that’s not up for debate. But I’m going to help make sure we don’t trample our future to meet a quarterly estimate. But, Bank Fuzz, c’mon, you’re flaking out on us. You just HAVE to get it together. Have to. Skip a night or two of hookah parties at your downstairs neighbor’s apartment. You’re going to need some now-missing clarity to help us keep ourselves on the straight and narrow. You owe us that, dudes.
Sage Happenstance, HCO
What can I say? Sorry about that; things happen. See, we have this banker friend, Sage, who’s been dying to contribute to the GonzoBanker juggernaut. He actually threatened to cut Tripp Johnson and me off from his seemingly endless supply of live Widespread Panic recordings if we didn’t let him write a guest spot. So, Tripp relented. Tripp made me do it; it’s mainly his fault.
Exhale, GonzoBankers, next time it’ll be all me……Hodgins