Has any BOLer out there ever experienced this:

The Regulators write the bank up for not doing a certain
thing that needs to be done. The bank looks at the certain thing decides that it isn't necessary for them and fills out a form telling the Regulators why. The Regulators come back and say, it doesn't matter it's law. The Bank still doesn't care and continues to do nothing about it.

Am I crazy to think that this is insane???

Nope!

No, you're not crazy, but I'd be suspect of your upper management

As long as the Reg applies to your institution, you have to follow it, no matter how assanine you may think the reg is.

Improved communication between the bank and regulator/ombudsman is needed.

Yes, I agree, but how do you change the mentality
that if we don't want to do it then we don't need to do
it. I don't want to be fined or worse jailed for
these type of instances!!!!

If the regulators say that it's a matter of law, ask them for the statute, then start digging. As we've seen from many discussions in the past, it's not unheard of for the regulators to cite phantom statutes/regs or for them to rely on regulators' conventional wisdom (which may/may not be based in fact).

If the regulators have a statutory basis for the criticism, and the bank's BOD/management refuse to correct the situation, CYA (or relocate it to another bank).

Ditto, Complyguy.

I'm not sure I understand the question. Are you asking if it's insane for the regulator to require compliance with an absurd law or regulation that doesn't really apply to you and they are being too picky?

Or are you asking if it is insane for management to blow off the examiners? AR.

Insane for management to blow off examiners!

There is no way I, personally, would want to be held liable for this attitude of sorts!

Like it or not, mgmt will eventually have to give in - if in fact the examiners are correct. I feel sorry for you for being "caught in the middle".

Ditto, Ditto, Complyguy.

Management has the option to take an adversary position, but of course there is a price to pay down the line. I know of another situation that was similar, that had management continually challenging examiners (OCC) and although the bank was very profitable it was closed by the OCC/FDIC based on the combined elements of not adhering to laws and regulations and deceptive practices relating to loan activity.

On the other hand, sometimes there are issues to be sorted out, so management may have a point, but they better come up with some documentation and involve an attorney to deal with the issue as the regulators have a big stick.

By the way, I would not want to be in your shoes as exams could be brutal with this type of stuff going on at the same time. Good Luck!

Correct me if I'm wrong but ultimately the board is responsible for compliance. If you do everything in your power to get the banks to comply and they refuse and you don't have management behind you for support; the bank will be fined and if anyone goes to jail it would be the board.

I have had similar a experience where directors decided not to comply with a C&D order. Trust me it may take a while but regulators will win every-time.

Make sure they know you are not part of the resistance. Call the examiners and speak to them confidentially. Do not be concerned with loyalty issues, as any management that decides to subject its officers to the personal liabilities they would have in backing such a decision, especially on a issue you know the bank is incorrect in defying, has abdicated its own loyalty and responsibility to its officers.

In reply to:

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If you do everything in your power to get the banks to comply and they refuse and you don't have management behind you for support; the bank will be fined and if anyone goes to jail it would be the board."

In reply to:

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Every bank officer has a fiduciary responsibility to stop and to report any activity that might impair the financial viability of the bank.

Examiners also write a report of their opinion on the abilities of bank officers. If you are perceived as being part of a problem, it can come back and hurt your chances of regulatory approval when applying for senior management positions that require approval by the regulators.

So its not just the board that can be effected.

And it's seldom the Board members that get barred from future banking jobs (an 8a action by the FDIC, not sure what it is by the others) - it's usually bank President and other officers. The agencies do have the power to remove people from the industry all together.

Kara:

Stick to your guns (standards). It is not easy sometimes as any of us will tell you but YOU must be comfortable with your decisions. And like someone else told you CYA. I have been through your situation twice. The first time was bad and I left the bank after working for them for only two months. I have my principles to protect and so do you. The second time was not quite the same but I sure documented everything until there was some management change over.

Maybe your management is just "pushing" the issue to see how far the examiners will go before abiding the rule. Not to say it is the "right" move but if it is not a vital issue.

Only you know the importance of what is being addressed and how sincere your management staff is. Good Luck on your decisions.

Opinions are mine not my employer

I don't know which particular regulation your management is resisting, but you may wish to visit your regulator's website and obtain a list of banks, bank officers, and directors who have been fined for various regulatory violations. It may help your case when presenting the need to comply to management. The Moneylaundering.com e-mail alert today highlighted a bank in NY that ignored both their regulator and paid consultants and received a $4 million fine for BSA violations. Management generally hates losing money.

Not knowing the specific regulation in question, and not knowing the temperament of your executives, I have to wonder if they are being obstinate on the grounds that
- the regulation is vague and ambiguous, or
- they think it may be unconstitutional and are hoping to take the issue to the Supreme Court.

Kara:

You could do a search on Keystone National Bank if anyone wants to see what happens when bank management blatantly disregards the examiners. I know the circumstances were a little extreme but I still am flabbergasted by that bank's attitude!!! I'm not certain exactly how many members of senior management are serving jail time!