Should Bankers Be Seen But Not Heard?
Bankers tend to be peaceable folk. They mind their business, and the financial business of others, day after day. They are discrete, speak softly (usually) and tend to be well-behaved if not even reserved. You would never pick a banker to be the life of a party.
This behavior builds trust in the customer. People feel safer when the people to whom they are entrusting their money behave calmly and discretely. It goes with the territory. Being calm and quiet, on the outside, at least, is an asset to a banker. We pride ourselves on this.
There is a down-side to this attribute. Bankers don't speak up for themselves. They trust, instead. They trust that people will see the value of the services they provide and their willingness to do it. They trust the public to trust them.
Unfortunately, this isn't what happens. When a consumer advocacy group gets wound up on a consumer abuse, perceived or real, they work hard for a solution. They lobby Congress, the agencies, the press, and the public. They don't give up until they reach what they consider to be a satisfactory solution.
These solutions include laws such as the "Truth In's...," the "Fair's...," Expedited Funds, HMDA, and RESPA. Consumer groups are proud of these accomplishments and use them in membership support campaigns.
How long will we have CRA? As long as there is any poverty. How long will fair lending be a priority? As long as there is any unequal treatment. How long will we have Truth in Lending? As long as people are concerned about the cost of their credit. In short, this isn't going to go away - not by itself anyway. And it certainly won't go away if bankers remain quiet.
How often have you heard it said that the institution would save some time by just waiting until the final rule came out? Why waste time reading a proposal when it's just going to change?
What happens when financial institutions take this approach? What happens is that no one hears their story. No one learns about the technical issues or reasons for certain practices. And, in the end, bankers lose because they were quiet and played the waiting game.
The rule-writing process goes through a proposal phase for a reason. The purpose is so that all interested parties can submit comments. These comments are intended to provide the rule writers with information and opinions needed to develop a fair and workable final rule. The rule writers depend on information from a variety on interested parties, including the consumers who will be protected by the rule and the financial institutions who will have to comply with it.
When bankers sit back quietly and refrain from participating in this process, their voice is not heard. They lose the opportunity to shape or influence the final rule. They forfeit the opportunity to provide the lawmakers and rule writers with information about process and procedures so that a rule can accommodate legitimate procedures without inappropriate barriers or expense. It's a bit like not voting and then complaining about the person who was elected.
Consumers will tell their side of the story. In fact, they usually get the ball rolling in the first place. Congress and regulators will be barraged with stories of consumers who were harmed by lenders. What consumers don't specify - and Congress doesn't usually ask - is who the lenders were.
Generally, and there are several very unfortunate exceptions such as Providian, chartered financial institutions are responsible lenders. It is not the banks, thrifts, and credit unions that have been taking unfair advantage of consumers. But it is those very institutions that will pay the price of new regulation - unless they speak up.
Right now, there is a proposal from HUD that would have a significant chilling effect on mortgage lending. Consumer advocates and many settlement service provider industries are supporting the proposal. If financial institutions don't comment, they will lose. Don't be the person sporting the bumper sticker that says "I didn't comment on RESPA!"
Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 12, 10/02
First published on 10/01/2002