<img src="https://ws.zoominfo.com/pixel/pIUYSip8PKsGpxhxzC1V" width="1" height="1" style="display: none;">

5 Scary Stories Guaranteed to Give You the Compliance Creeps!

4 min read
Oct 31, 2018

It's Halloween, and you know what that means! The compliance ghouls, ghosts, and goblins are out to play. In this article, we will be sharing 5 recent stories that are guaranteed to give you the compliance creeps! You'll learn about a recent settlement, another community group's lawsuit against a bank, and a Fair Lending issue that is rising from the grave.

Whether you're a compliance professional or a leader of a financial institution, these stories will give you a helpful survey of the compliance landscape. Get ready for tricks - and a treat!

happy-halloween-from-trupointIt's that time of year again! Time for witches, ghosts, black cats, and the doorbell that rings at exactly the wrong moment in your favorite scary movie. Here, you'll read five scary stories to get you into the spirit of the season!

Whether you're a Compliance Officer or a President, here are 5 scary banking stories from October guaranteed to give you the compliance creeps!

We'll also be providing a few best practice tips throughout so that you can reduce the risk of being haunted by the regulators. Let's get this party startled: 

1. We Exposed Modern-Day Redlining in 61 Cities. Find Out What's Happened Since. - Reveal, October 25, 2018

Earlier this year, Reveal published a bombshell article about Redlining in US cities. It sparked more than 100 Congressional hearings, lots of interest from local and state politicians, and additional investigative articles published by other news outlets. In this article, they tell what has happened since. Here's the short version:

  • Attorneys General of five states and the District of Columbia have launched investigations into Redlining.
  • Jerome Powell, Trump-appointed Chairman of the Federal Reserve, told a House committee that "Racial discrimination in mortgage lending and in any kind of lending is unacceptable."
  • Pennsylvania state Senator Vincent Hughes will introduce a package of legislation to fight Redlining when the state Legislature gets together in January. In it? A state-specific Community Reinvestment Act that would extend coverage to credit unions and non-bank mortgage lenders.
  • Lots and lots of involvement from community leaders and community groups focused on reducing Redlining and holding financial institutions accountable.

It's time to bone up on your Redlining risk management - particularly if you're operating in a metro area!

Get a Free Redlining Case Study to Learn How One Bank is Managing Risk:


2. Citigroup May Face Fair Lending Penalty from Regulator - sources - Reuters, October 10, 2018

Screenshot 2018-10-31 03.39.32Earlier this month, Reuters reported that Citigroup may be looking at Fair Lending fines, sanctions, and/or more oversight from the OCC as a result of self-reported potential disparities. 

Citigroup has a program that provides discounts on mortgage rates to customers with large deposits or other wealth at the bank. During their own Fair Lending review, they found that some minority borrowers were not getting the mortgage discounts that they qualified for. They reported it to the OCC, and said they were working to fix it. 

According to sources at the OCC, the regulator is looking at additional penalties for the bank. How's that for scary?

3. OCC Secretly Stunted JPMorgan's Growth for 6 Years - Bloomberg, October 26, 2018

A report from Bloomberg illustrated that the OCC had prevented JPMorgan from expanding due to issues related to the financial crisis. At that time, JPMorgan acquired the failed Bear Stearns and Washington Mutual, and failed to identify certain transactions related to Bernie Madoff's Ponzi scheme. Due to risks, oversights, and other factors, the $1.3T (yes, trillion) bank had to pay more than $30M in fines, penalties, and legal costs. 

As part of the "punishment," the OCC also prevented the bank from opening branches in new states. The Trump administration has rolled back those barriers, and JPMorgan is now planning to expand with more than 400 branches in 23 new states. 

While this is good news for JPMorgan, which stands to gain $1.5 billion in revenue over the coming years, it may present additional competitive disadvantages for local banks. Competing with a giant like JPMorgan for customers and internal talent is going to be a real challenge.

One way to stay competitive? A strong branch network strategy. Learn more here.

4. FDIC Makes Public September Enforcement Actions - FDIC, October 26, 2018

Screenshot 2018-10-31 03.38.32The FDIC just released all of the new enforcement actions and consent orders, and terminations of existing consent orders to the public. This provides some really valuable insight into how the regulators are approaching compliance.

On the list? A BSA/AML consent agreement, a consent order to improve a CMS, and a consent order related to a violation of a state banking law.

All in, there were 24 new or updated consent orders released in September, and there have been 166 so far this year. Last year, there were 225 consent orders by Halloween. That reduction in number of consent orders can be seen as a small treat for bankers!

5. CFPB Official Vows to Stay In Job After Reports of Past Racial Remarks - Wall Street Journal, Oct. 1, 2018

Current Associate Director of the Bureau of Consumer Financial Protection's supervision, enforcement and fair lending Eric Blankenstein was found to have used the N-word in a blog post while a student at the University of Virginia. As late as 2014, he was found to have posted racially charged comments on blogs. Blankenstein has said that he will stay on the job, despite public and internal backlash.

Ncontracts Viewpoint: Every year, Halloween provides us with a chance to have a little fun with compliance. Last year, we wrote about the 4 spooky ghosts haunting your compliance program (complete with Halloween-themed gifs). If you're looking to reduce the number of scary moments you have next year, work on improving your compliance risk management! 


Related: What Is A Compliance Management System And Why Your FI Needs One


Subscribe to the Nsight Blog