ATTORNEY:
Are you qualified to give a urine sample?
WITNESS: Are you qualified to ask that question?
(Disorder in
the American Courts)
There may be no burning issues for financial institutions
since the legislature is not in session and compliance staffs are trying to
insure that their financial institution can master the CFPB’s mortgage and
associated regulations—maybe an issue, but just smoldering.
As I was traveling a busy Albuquerque street on Friday last
I was crowded by one of Albuquerque’s long double length buses. Being always ready to make a buck, the city
emblazoned along the complete length of one of the double buses giant
advertisements that cover the windows (apparently without impairing passengers’
views). As I looked up I saw a full bus
length advertisement on the New Mexico Attorney General’s foreclosure relief
program. It said, roughly, “have
foreclosure problems call the N.M. Attorney General,” etc. It was in lettering approximately two to three
feet high. It had a website, which touts the Attorney General “Home
Preservation” program. I checked the website.
It has helpful information in somewhat
lurid detail. It seems to address a problem
that implies that all foreclosures may be tainted. There is no question that there have been
abuses in the foreclosure process and this may be part of the Attorney
General’s participation in the settlements of such cases. However, as we climb
out of the mortgage crisis, one wonders if a bit of restraint is not
needed.
The Albuquerque Business First has had a series of articles
on the impact of Dodd-Frank regulations on community banks. It has surveyed
bankers across the state. The focus has
been on CFPB regulations, but one of the articles focused on a general
Dodd-Frank provision, which has had little attention---the “diversity”
provision of Section 342 of the Act which mandates diversity and establishment
of the Office of Minority and Women Inclusion ( “OMWI”) in each regulatory agency.
Standards for diversity practices for each financial institution regulated by
that agency must be established. The
comment period is under way. I recommend
reviewing the comments by the American Bankers Association and other
associations.
(http://www.aba.com/Advocacy/commentletters/Documents/clOMWIdiversitypolicies2014Feb.pdf
.) It is somewhat disturbing that some
comments to the proposal argue for more sweeping and draconian provisions for
the final regulations.
Some banks have already been subject to
reporting requirements regarding diversity in hiring practices. In particular,
banks with 100 or more employees and banks that are federal contractors and
employ 50 or more employees are required to file Employer Information Report
EEOC-1 with the Equal Employment Opportunity Commission and the Office of
Federal Contract Compliance Programs. Banks that serve as depositories for US funds
or banks that are issuing or paying agent or for U.S. Savings Bonds and Notes
are covered so long as they employ 50 or more workers. These existing requirements will not change
under the proposal. Most importantly,
the proposal does not extend the filing or maintenance of such report to banks
not currently filing them. The proposal
does suggest voluntary maintenance of reports having similar information may be
advisable.
The proposal has typical vague
standards such as organizational commitment to diversity, workforce profile and
employment practices, vendor diversity and “transparency”. Board involvement is suggested for management
and employee diversity programs. There
is some recognition that vendor diversity may be a difficult program in
community banks-- but not much.
The Joint
Statement speaks in terms of “assessments”
which will apparently be ideally both a “self assessment” and an agency
assessment. With regard to the agency assessment, the
Joint Statement specifically states that diversity will not become the subject
of a separate examination procedure. This is a nod to Dodd-Frank Section 342 (b)(4)
which states an assessment of diversity practices of a regulated entity may not
be “construed to mandate any requirement or otherwise affect the lending
policies and practices of any regulated entity, or to require any specific
action based on the finding of (an) assessment." We will see if in practice the restriction of
Dodd-Frank is followed by the regulatory agencies in actual practice.
Do Good,
Marshall G. Martin
(505) 228 8506
