The Akron Legal News

Ohio Bankers League event encourages dialogue on current banking issues

ANNIE YAMSON
Special to the Legal News
Published: September 2, 2014

Recently, the Ohio Bankers League hosted what is quickly becoming one of its most popular annual events, the 2014 Regulator Roundtable.

The event is an opportunity for bankers from around the state to hear directly from consumer compliance examiners working for the major banking regulation authorities.

This year the event was held at the Fawcett Center as the OBL saw its largest turnout ever for the roundtable, according to organization officials.

During the question-and-answer segment, leaders from community banks and thrifts were given the opportunity to speak directly to representatives from the FDIC, the Federal Reserve, the Consumer Financial Protection Bureau and the Office of the Comptroller of Currency.

The range of issues highlighted a sea of evolving regulations and even technology solutions that local banks have to deal with on a constant basis.

From fair lending practices to flood insurance to simple things like overdraft fees, the general consensus was that the banking industry is going through a period of intense change but it is one in which cooperation is the name of the game.

“Certainly where we come in is events like these,” said Mike Adelman, president of the OBL. “Let’s get the parties together, let’s have a dialogue, let’s see where we can’t maybe inject some logic into the process.”

An ongoing conversation is paramount to streamlining the banking industry, according to Adelman.

“We do want it to be a partnership,” he said. “We’re just so appreciative that (the regulators) are willing to come to the table and share their insights and be accessible and address the questions that are on bankers’ minds because it is critical that we have those lines of communication going.”

But change is incremental, he said, and events like the roundtable allow bankers and regulators to zero in on the smaller issues that may make a big difference in the future.

One of the biggest topics highlighted last week was the sheer amount of data and information that banks have to deal with today.

Wire transfers and overdraft fees, for instance, prompted conversations about automated monitoring systems at community banks.

“The landscape has changed,” said Chris Saunders, consumer compliance functional examiner in charge for Huntington National Bank and the OCC. “For a long time, community banks said they didn’t have high-risk customers.”

Today, banks need to monitor activity from overdrafts to matters of national security and that means that more and more banks need to switch to automated monitoring systems.

“It tends to be that there has been a lot of activity and a lot of financial transactions tied with different terrorist groups that have occurred via wire transfers,” Adelman explained. “Now it might be completely legitimate ... but the banks are really working hard to make sure that they know who they are doing business with.”

According to Adelman, the banks’ ability to cope with large amounts of information is where the role of a trade association like the OBL comes into play.

And while the conversation started out addressing the consumer as a risk that banks need to closely monitor, both regulators and bankers recognized a shift in the industry toward protecting the consumer.

“After all, you’re an institution first and foremost there to serve your customer,” said Jeff Quayle, who moderated the event and serves as general counsel for the OBL.

But it was clear that, on many issues, an ethical debate has been going on for quite some time.

“Is it unfair for a $5 overdraft to cause a $25 or $35 fee?” Saunders asked. “How many charges in a day are unfair? I don’t have the answers to these questions.”

A banker in the audience noted that the inverse would not be fair either, or for a thousand dollar overdraft to cause a five dollar fee.

“The people who write the rules don’t think that way,” Saunders answered. “They think along the mindset of the consumer.”

John George, senior compliance examiner for the FDIC, added that overdraft fees should not cost people money.

Instead, banks are held responsible for educating their customers about their processes and for monitoring activity through reliable automated systems.

“Manual monitoring doesn’t work,” said George.

In the end, however, it seems that some banking procedures will remain rife with complication.

Shawn Keller, president of the Citizens Bank of DeGraff, closed the session by asking one last question: When will banks be able to simplify disclosures to the consumer?

Specifically, he addressed mortgage paperwork, which he referred to as a stack of paper that the average consumer never reads.

Keller asked if a two-sided summary page could be on the horizon.

“Don’t hold your breath,” George answered.

Saunders agreed: “I don’t think they will ever solve that problem.”

However, in spite of all the changing rules and procedures, Adelman remained optimistic.

“It’s been an exciting year for the banking industry with the merger and acquisition activity going on with still some uncertainty in the state and national economies, but over all the bankers are really upbeat,” he said. “Despite the regulations that they’re working with, they’ll find a way to make it all work.”

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