Wisdom on Selling

"A sales culture is a listening culture," according to James T. Mann, President and CEO of First Federal Savings Bank of Clarksville, Tennessee. Think about it. And after you realize the wisdom of Mann's observation, incorporate it into your training. Compliance is all about doing what the customer wants. If you don't listen, you won't know what they want.

Information Security
Attendees at ACB's National Compliance Conference heard some advice from Randall Roth, CEO of Vitex, Inc., a technology company. Several of his points were valuable, particularly in the context of protecting the privacy of your customers and maintaining information security in your institution. Roth recommends using an "ethical hacker" to test the security of your systems. An ethical hacker is one who is skilled at hacking into systems but does so to help you - rather than to steal from you. You only know how good your security system is when someone breaks into it.

Roth also suggests that you and all bank employees think of e-mail as a postcard. It is not a sealed envelope. Email is actually something that is available to be read by anyone with the skills to do so. Managing websites and vendors is already a challenge, and will only become more so. You should be able to reproduce what your website - and forms and disclosures - looked like at all times. Keep a copy of all versions - every time your techies go in and fix or change something. Chances are they won't do this unless you find a way to require it.

Finally, Roth shared some statements that you never want your examiner to hear:
"The vendor has taken care of this." "We have it covered." "We have a firewall." "We're a small bank. No one would bother with us."

These always precede serious trouble.

RESPA: What Has to Be Signed
Even though lenders have to give disclosures to loan applicants, most of the disclosures do not have to be signed by the applicant. Two disclosures made under RESPA, however, must be signed by the applicant. These are the transfer of servicing notice that is provided within three days of taking the application, and the affiliated business arrangement referral notice. All mortgage loan application files, unless denied within three days, should contain both of these disclosures - signed by the applicant. While it is not necessary to obtain signatures on other disclosures, doing so is a convenient way of establishing compliance. Examiners like to see signed copies of disclosures in loan files.

OFAC Updates
OFAC has issued a list of all changes to its list since January 1, 2000. This list should be useful in monitoring and checking your internal controls and procedures for OFAC compliance. You can find the list at OFAC's website, www.treas.gov/ofac. The FDIC published the list as FIL-59-2000. This is also available on the FDIC website at www.fdic.gov. Go to "News, Events and FOIA" to find the Financial Institution Letters.

CRA Changes on the Horizon
The bank regulatory agencies have promised to begin a review of CRA in year 2002, a mere 1.5 years away. For some time, Ellen Seidman, Chairman of OTS has been calling for an earlier review. Now Donna Tanoue, Chairman of the FDIC, has joined the call for review.

In a speech to the National Bankers Association, Tanoue called for taking a new look at providing CRA investment opportunities that would also support activities and capital of minority-owned banks. Tanoue has also opened the door to consideration of such investments in financial institutions outside of the investing bank's assessment area and state. Recognizing that such a move could have significant consequences - some unintended - Tanoue asked bankers to begin thinking about this now.

Copyright © 2000 Compliance Action. Originally appeared in Compliance Action, Vol. 5, No. 11, 10/00