The Only Thing Compliance And Commercial Lending Have In Common Is The Letter "C"

We have written several articles on the compliance problems that occur in commercial lending departments. The most serious violations occur when commercial lenders "don't do that consumer stuff" because they think it doesn't apply to them.

Commercial lenders have an amazing facility for avoiding admissions that any important compliance regulations - such as Regulation B - apply to commercial lending as well as to consumer lending. As a result, commercial lending can be the part of the bank where the worst violations occur. This will continue until compliance managers and their banks learn how to manage their commercial lenders. The key to changing this is what we call "user friendly" compliance. The compliance division should support other staff in the bank and help them do their jobs. This means avoiding the technique of issuing ultimatums from "Mount Compliance" and communicating with your bank staff in their context. This also means you have to know a lot about all the jobs in the bank. We note that this is a great reason for taking what other people would call breaks but for you are information gathering forays and learning missions.

The astute compliance professional should find it particularly informative to wander into the commercial lending department. Not only will commercial lending be refreshingly different from areas of the bank that are more familiar and less unwelcoming, it should also be a fruitful place to gather opportunities for compliance attention.

However, you will get nowhere with commercial lenders unless you work on their terms. Even commercial lenders can respond to user friendly compliance. However, it is vitally important that commercial lenders see you as someone who understands their work and the way in which they do it. Without this, you have no credibility with them. After all, you are a cost center and they make money - lots of it, to hear them tell.

Once you have built communication bridges, work with them to develop procedures that work and that work without impeding the lenders. Finally, find a way to make compliance tools help commercial lenders. To do this, you need to understand your commercial lenders' priorities and how they work. Be creative and design a tool or procedure that helps get your job done -compliance - while supporting the lending process.

In this issue, we offer you a technique that works. It was developed by Kathy Curtis, Compliance Manager for Century National Bank in Washington, D.C. Kathy has implemented this form and procedure in her bank and established a positive record for ECOA compliance in the commercial lending department. We are grateful to Kathy and to her Bank for their willingness to share this technique with subscribers.

Copyright © 1997 Compliance Action. Originally appeared in Compliance Action, Vol. 2, No. 4, 3/97