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Banker survey shows similar compliance worries
WASHINGTON (12/31/08)—Credit unions may be interested in a recent American Banker survey of compliance burden, said Credit Union National Association (CUNA) Senior Vice President of Compliance Kathy Thompson Tuesday, because the headaches related will sound so familiar. The Dec. 30 article, “In Compliance, More Turn to Specialists,” reports that bankers across the United States say compliance is getting tougher as regulatory burden increases and examiners’ scrutiny intensifies. President/CEO Tom Welch of $76 million-asset Pioneer Federal S&L in Dillon, Mont. kicked off the article saying he was told recently that seven examiners soon would be paying a visit over a four-week period. His last review, he said, involved four examiners and lasted closer to two weeks. The article is based on a survey American Banker conducted in October with Greenwich Associate LLC of Stamford, Conn. Polled were 308 bankers from institutions of all sizes. Of the respondents, 85% said they have a chief compliance officer or an equivalent position, up from 70% last year. Of interest, for 2008 all the banks in the survey with greater than $10 billion in assets said they have a chief compliance officer, compared with 84% of smaller banks—quite an increase from last year’s figures that reported 89% of the large banks and 70% of the small banks had one. The bankers also reported stunning jumps in compliance spending with 92% of the respondents saying it had increased in the past three to five years, and 64% of them called the increase significant. Survey respondents spend on average 6% of their annual revenue on compliance, but smaller banks spend a higher percentage than larger ones do, some reporting a number as high as 10%. One banker, Charlie Cross, president/CEO of $125 million-asset Cornerstone Bank of Eureka Springs, Ark., guessed that these higher compliance costs are a major factor when some small community banks decide to sell themselves. Thompson noted that credit unions and community bankers share a lot of similar concerns about compliance burden. "I was particularly taken with the observation of some of the community bankers interviewed who feel that in recent examinations they have been more scrutinized than their larger competitors because examiners feel less intimidated in trying to evaluate their operations and compliance efforts." Bankers said they expect the compliance burden to get even heavier in 2009 as the federal government, and in some cases state agencies, ratchet up regulatory requirements, particularly involving mortgage lending. As one banker stated, he hopes "common sense" will prevail. CUNA's Examination and Supervision Subcommittee is completing a survey of credit unions on their recent examination experiences and concerns about compliance burden. The results are expected to be released in early 2009.

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