Not long ago, my friend Anthony Demangone, the COO of the National Association of Federal Credit Unions, preached about why credit union leaders should care about compliance. His views make sense not merely for credit union leaders, but for senior management and directors of financial institutions of all charter types.
Here's my slant on why Anthony thinks that leaders who groan about compliance ought to "stiffle it" and get with the program.
- Financial institutions are highly regulated. "Get over it." If you don't like regulations, you're in the wrong business. Try something less regulated, like gun running from Turkey to Syria.
- Compliance is insurance. Spending bucks on compliance is almost always a heck of a lot cheaper in the long run than paying for the consequences of non-compliance.
- Good compliance makes your institution "nimble," not only in terms of what it can't do, but also in what it can do. "If you don’t know the rules of the road, you’re going to be putting out regulatory fires day-in and day-out." That's no way to live. As Dean Wormer told Flounder, "Being fat, drunk and stupid is no way to go through life, son."
- Compliance helps you stay ahead of the curve. "A good compliance function at your credit union can read the regulatory and legislative tea leaves. What will happen with mortgage lending? Overdraft protection? Interchange? The better you are at compliance, the better you’ll be at addressing those questions, and more."
I've said a number of times on this blog that being in a highly regulated business takes a certain mindset. If the regulators prefer you to dance a Viannese waltz and you are constitutionally incapable of doing any dance other than the Ickey Shuffle, try another line of work. Both you, your employees, your regulators and, over the long run, your loved ones will be much, much happier. In fact, I've recently talked with at least one former bank CEO who thanks his Cosmic Muffin and Hairy Thunderer every day that he found his way out of the highly regulated world of banking into the relatively less-regulated world of commercial loan brokerage. The banking (or credit union) life is not for every one. Life as square peg being constantly pounded into a round hole will simply make you miserable. Not as miserable as your average lawyer, but darned close.