By Robert H. Halleck
Regulatory Risk Is Unavoidable
For those not with me from the beginning of this series, I've been sharing lessons I learned during 35 years in financial services management—lessons that are just as applicable today as they ever were. So far, we've covered bad loans, balance sheet blunders, bad branches, portfolio management bad employees, capital positions and board relations.
Running a financial institution has one easy aspect. Unlike college where the final exam has questions or material you have never seen, the regulatory exam generally covers the applicable regulations. Through networking, meetings, consultants, news articles and other sources you can usually get a heads-up on their current areas of concern.
Are examiners sometimes arbitrary or unreasonable? Yes. Are they unfair? Sometimes. From their view, there is a huge risk in telling you your credit union is anywhere near perfect and a low risk in finding items you need to work on. Regulators by their very nature are worry warts. Accept that and you will be happier.
One of my old bosses used to love to tell the story about how he learned what power was. As a young Navy signalman in WW II, he once told a chief petty officer, "You don't have the power to make me do that." The next day, he was on a ship heading for Alaska having been assigned overnight to a Navy tug operating in Arctic waters. Regulators have the power. Keep abreast of regulations and your compliance efforts. Hard work? Yes, but it usually pays off.
Robert H. Halleck, who retired in 2002 from a 35-year financial services career, remains vicariously involved in the industry through his wife, a credit union CEO.
Read Lesson 9.
Stay on top of the latest compliance issues with help from the Compliance Guy at NAFCU's Compliance Blog. Honest, he almost makes it fun!
Also, check this archive of monthly online-only "On Compliance" columns from Credit Union Management.
