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A Litigator’s KISS Takeaways from CFPB’s Summer 2018 Supervisory Highlights

September 12, 2018

Authors

Douglas Thompson

A Litigator’s KISS Takeaways from CFPB’s Summer 2018 Supervisory Highlights

September 12, 2018

by: Douglas Thompson

KISS. An acronym first utilized in military equipment design in the 1960’s, “Keep it Simple Stupid.” Litigators rely on KISS in formulating trial themes and presentations to juries. Simple messages resonate. In that vein, I offer three KISS takeaways from the Bureau of Consumer Financial Protection’s Supervisory Highlights, Issue 17, Summer 2018.

KISS #1: Details Matter. 

On two key levels: (a) your business compliance operations and consumer interactions, and (b) in the Bureau’s supervision and examination conclusions. Taking

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FDIC Examinations and Cyberattack Risk

May 7, 2015

Authors

Jerry Blanchard and David Zetoony

FDIC Examinations and Cyberattack Risk

May 7, 2015

by: Jerry Blanchard and David Zetoony

FDIC bank examinations generally include a focus on the information technology (“IT”) systems of banks with a particular focus on information security. The federal banking agencies issued implementing Interagency Guidelines Establishing Information Security Standards (Interagency Guidelines) in 2001. In 2005, the FDIC developed the Information Technology—Risk Management Program (IT-RMP), based largely on the Interagency Guidelines, as a risk-based approach for conducting IT examinations at FDIC-supervised banks. The FDIC also uses work programs developed by the Federal Financial Institutions Examination Council (FFIEC) to conduct IT examinations of third party service providers (“TSPs”).

The FDIC Office of the Inspector General recently issued

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Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

Authors

Jonathan Hightower

Regulators’ “No Stress” Message to Smaller Banks Only Tells Part of the Story

May 14, 2012

by: Jonathan Hightower

On May 14, 2012, the Federal Reserve, FDIC and the OCC released a joint statement confirming that that banking organizations with total consolidated assets of $10 billion and under will not be required to conduct formal stress tests.  Management of many smaller banking organizations had been concerned that the stress testing required of larger banks would “trickle down” in an informal sense to smaller banks.  With this regulatory statement, that concern is alleviated, at least in the official sense.

We continue to believe that the heightened (or perhaps renewed) emphasis on risk management by the regulators will affect banks

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What Bank Directors Need to Know About Bank Secrecy Act Compliance

February 24, 2012

Authors

Bryan Cave Leighton Paisner

What Bank Directors Need to Know About Bank Secrecy Act Compliance

February 24, 2012

by: Bryan Cave Leighton Paisner

Ten years ago, Bank Secrecy Act (BSA)/anti-money laundering (AML) compliance was one of the biggest areas of concern for banks and their regulators.  Following September 11 and the heightened regulatory focus on BSA matters, most banks found it necessary to expend significant resources to enhance or even rebuild their BSA/AML programs.

In the past few years, bank regulators have had to focus on other matters, including residential and commercial loan concentrations, adequate capitalization, and even bank failures.  Banks also wisely have focused on these matters during these difficult economic times.

It is important, however, that these other matters do not

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Directors and the Exam Process: Get Involved Early

February 8, 2012

Authors

Jonathan Hightower

Directors and the Exam Process: Get Involved Early

February 8, 2012

by: Jonathan Hightower

My colleagues and I frequently meet with bank boards that have received very sobering reports from their bank’s examiners. While the directors’ responses to bad examination reports vary greatly, there is one emotion that is nearly universal: a feeling of helplessness. As a result, directors almost always express a desire to get involved in the exam process after they receive negative feedback from the examiners, whether through requesting meetings with higher-level regulators, appealing the exam findings, or fighting a proposed enforcement action. Unfortunately, those actions, particularly if taken after a final examination report is issued, seem

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Self-Exam: Improve the Health of the Bank and its Standing with Regulators

February 2, 2012

Authors

Jonathan Hightower

Self-Exam: Improve the Health of the Bank and its Standing with Regulators

February 2, 2012

by: Jonathan Hightower

Doctors recommend various self exams to catch disease early, so it can be treated before it’s too late. As it turns out, a self examination can be good for the health of a bank as well. My colleagues and I recommend that our banking clients and friends undertake a regular self examination in order to identify potential internal and external challenges that the bank may face. As discussed more thoroughly below, these self examinations can also be very helpful when the bank’s doctor (your friendly regulator) comes in for a check-up.

Enlist internal audit

To

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Bank Buildings: When Directors Are the Landlords

December 7, 2011

Authors

Jonathan Hightower

Bank Buildings: When Directors Are the Landlords

December 7, 2011

by: Jonathan Hightower

Are any of your bank branches and offices owned by directors? That could spell trouble but it can be handled well. Here’s how.

During the mid-2000’s, it was commonplace for a bank, particularly a de novo bank, to lease some or all of their bank facilities from an entity controlled by the bank’s directors. At the time, these arrangements truly represented a “win-win” situation. The bank was able to occupy built-to-suit facilities while conserving liquidity so that cash could be deployed through making loans with attractive yields. At the same time, the directors, many

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Regulatory Exam Tip: Early Intervention

October 14, 2011

Authors

Jonathan Hightower

Regulatory Exam Tip: Early Intervention

October 14, 2011

by: Jonathan Hightower

By now, many bankers have experienced the following situation:  you have just left a management exit meeting with regulatory examiners, and you are stunned by the negative conclusions that the examiners have reached.  In the wake of this disappointment, many bankers wait for the examiners to meet with their board and issue the Report of Examination before putting “their side of the story” on the record in a written response to the Report of Examination.

While we always recommend that bankers point out any factual inaccuracies in a Report of Examination via a written response, we believe that bankers may be

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Regulatory Exam Tip: Write Your Own Exam Report

October 7, 2011

Authors

Jonathan Hightower

Regulatory Exam Tip: Write Your Own Exam Report

October 7, 2011

by: Jonathan Hightower

Over the last few years, we have heard from many of our clients that statements and conclusions in their exam reports are unfair and inaccurate. It is important to understand that regulatory Reports of Examination based upon the data that is given to examiners and the examiners’ interactions with management during the exam process. As a result, we encourage bankers to prepare extensively for regulatory exams by creating presentations that tell the Bank’s story, especially highlighting improvements in the bank’s condition since the time of the most recent regulatory exam or visitation.

While the information in the presentations may seem

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