Skip to content
GeoDataVision
Thread Options
#2084509 - 06/21/16 10:40 PM Severity of Non-Compliance By Reg
Cheli Offline
Platinum Poster
Cheli
Joined: May 2013
Posts: 919
Hi - Is there a tool someone is willing to share, or perhaps a summary here, of the severity of not complying with reg B, C, V, X, Z and Flood?
I am researching the regs and not all too familiar where to find them...
Can someone help me or point me in the right direction?

Thank you.

Return to Top
Lending Compliance
#2084531 - 06/22/16 01:02 PM Re: Severity of Non-Compliance By Reg Cheli
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
Since all violations of regulation or law could be subject to the FDICA Section 8 CMP provisions, does it really matter what the individual laws may say?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2084535 - 06/22/16 01:11 PM Re: Severity of Non-Compliance By Reg Cheli
Amandak Offline
Member
Joined: Jul 2013
Posts: 80
Wisconsin

If you PM me your email address I will get you a copy of the penalties I have found. I use this for my compliance risk assessment.

Return to Top
#2084644 - 06/22/16 05:12 PM Re: Severity of Non-Compliance By Reg Cheli
Cheli Offline
Platinum Poster
Cheli
Joined: May 2013
Posts: 919
I honestly don't know Randy...I am now trying to figure out how to understand what is at stake... I came in late to the ball game a few years ago and still trying to wrap my head around the new rules, existing rules, and the repercussions of non-compliance. A newbie or green if you will compared to some of the amazing "gurus" here :-) This has been a great resource so I thought I would start here...

Return to Top
#2084645 - 06/22/16 05:29 PM Re: Severity of Non-Compliance By Reg Cheli
Darth HMDA, CRCM, CAMS Offline
Diamond Poster
Darth HMDA, CRCM, CAMS
Joined: Dec 2013
Posts: 1,387
CA
The ABA keeps a database of all CMP's issued, by regulation and regulator. It's on their website but I cant remember where. I think it is updated annually. I have a copy of what I think is the most recent (2012-2015).

PM me your email and I will send you a copy.

As Randy said, there are consequences for all violations . It helps to know what are the regulator's hot buttons at the moment though.

Thanks and good luck!
_________________________
The opinions expressed are mine, do not represent the opinions of my employer, and they are not to be taken as legal advice.

Return to Top
#2084661 - 06/22/16 06:08 PM Re: Severity of Non-Compliance By Reg Cheli
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 79,912
Galveston, TX
The OCC has a chart and it would apply to all banks at 12 CFR 19.240.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2084681 - 06/22/16 07:14 PM Re: Severity of Non-Compliance By Reg Cheli
Cheli Offline
Platinum Poster
Cheli
Joined: May 2013
Posts: 919
Thank you Randy and Darth HMDA.

Return to Top
#2084692 - 06/22/16 07:43 PM Re: Severity of Non-Compliance By Reg Cheli
Reads Regs Offline
Diamond Poster
Joined: Nov 2004
Posts: 2,294
The CFPB published an interim final rule adjusting civil money penalties for inflation. https://www.gpo.gov/fdsys/pkg/FR-2016-06-14/pdf/2016-14031.pdf
_________________________
Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.

Return to Top
#2084701 - 06/22/16 08:00 PM Re: Severity of Non-Compliance By Reg Cheli
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,441
Florida
One thing additional - for fair lending, if it is housing related, creditors will generally be sued under the Fair Housing Act, as the penalties are more onerous than ECOA.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

Return to Top
#2084703 - 06/22/16 08:03 PM Re: Severity of Non-Compliance By Reg Cheli
Cheli Offline
Platinum Poster
Cheli
Joined: May 2013
Posts: 919
Thank you very much Reads Regs. This is a good visual.

Return to Top
#2084768 - 06/22/16 10:41 PM Re: Severity of Non-Compliance By Reg Cheli
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,082
Toano, VA
Cheli- It's been 20+ years since this topic was on my desk, but the concepts haven't changed.

The natural expectation is that your project will end with a nice neat spreadsheet detailing the good, the bad, and the ugly. A matrix will be helpful, but some things don't fit neatly in boxes. As an example, Darth HMDA mentioned the "violation of the month" problem. When the regulators get a burr under their saddles about one violation or another, they ratchet up the examination effort and that usually results in more findings which results in more enforcement actions and possibly more monetary penalties. The statutory penalties didn't change, but your risk did.

Another game-changer is recurring violations. Regulators REALLY dislike repeats. Last exam, you promised to fix whatever caused this kind of violation. The fact that it's still there moves it up to a management problem (plus the penalties, if any, that applied to all of your infractions since the last exam.) Repeat findings make for frosty exit conferences. (Be sure your resume is up to date.) Once again, the statutory penalties for the violation didn't change, but your risk did.

Regardless of how you plan to use your matrix, save the top category for violations that can result in unacceptable consequences. This is your "zero tolerance" list--you always do everything it takes to avoid these violations. Mine included any infraction (RESPA Section 8, for example) that could result in one or more bank officers or employees going to prison. Also on this list were violations that could restrict our franchise (such as the combined effects of a finding of credit discrimination triggering a "substantial non-compliance" CRA rating.) Although it's tough to pick a cut-off point, violations that can lead to massive penalties (money laundering, for example) and retroactive reimbursements (TIL and possibly other rules) deserve your highest attention.
_________________________
...gone fishing.

Return to Top
#2084861 - 06/23/16 05:11 PM Re: Severity of Non-Compliance By Reg Cheli
Cheli Offline
Platinum Poster
Cheli
Joined: May 2013
Posts: 919
Very helpful...Thank you so much...I may be back with some questions.

Return to Top
#2084947 - 06/23/16 09:01 PM Re: Severity of Non-Compliance By Reg Cheli
Richard Insley Online
10K Club
Richard Insley
Joined: Oct 2000
Posts: 10,082
Toano, VA
After finishing the comment above, I remembered another experience where I didn't see a HUGE risk until it hit me in the face.

The regulators were in for an exam and their scope included transfers from MMDAs. We had adequate policy, procedure, and deposit contract language to enforce the "no more than 6 per month" rule, but they found lots of exceptions.

It was a simple reg with no built-in penalties and an obvious remedial solution. Not a big deal.

I wasn't very concerned until they explained that what could only be described as an administrative weakness would be grounds for them to reclassify the MMDAs as transaction accounts and require us to post retroactive reserves. Still not a show stopper. Then they clarified that they were talking about the entire $250,000,000 portfolio, not just the three pages of exceptions they handed me. With fed funds in the 8% range and a 10% difference in the reserve requirements for transaction accounts vs. MMDAs, I was staring at a penalty in the $1.5 to $2.0 million range...per year! By the next morning, that portfolio was squeaky clean and we dodged the bullet.

Stuff happens.
Last edited by Richard Insley; 06/23/16 09:05 PM.
_________________________
...gone fishing.

Return to Top

Moderator:  Andy_Z