Bank Lawyer's Blog

SARs: They're Not Just For Goats

We've speculated for years that when a financial institution files a SAR, it's fed to FinCen's pet goat. However, NAFCU Regulatory Compliance Counsel Bernadette Clair reminds us today that a few SARs aren't lodged firmly in a goat's gullet, but actually generate some law enforcement firepower ("Book 'em, Dan-O! Five Counts, Using Campaign Funds To Buy A 'Date'"!). Bernadette lists a representative sampling of criminal actions that resulted from SAR filings, as profiled in FinCen's most recent SAR Activity Report - Trends, Tips & Issues.

My personal favorite? That would be the SAR that led to the smackdown on the illicit importation of human growth hormone. Sure, Ponzi schemes and our old friend, "Mr. Blow," may grab the nefarious glamour, but nothing says "Threat To Western Civilization" more than men and women who look like this:

 

So, keep up the good work, FinCen. We'll all sleep better knowing that our SARs are forcing bodybuilders to make muscles the way they had to make them before HGH ruined the "sport": picking up 98-pound weaklings by their ankles and stuffing them into gym lockers.

Unrelated Ruminations

A couple of bank-related scattershots while wondering why I ever thought that the pace of life would slow down as I aged:

The recent imposition of $7 million in civil money penalties by the OCC and FinCEN against Pacific National Bank of Miami, Florida for BSA violations brought home to me once again the fact that while the rest of the nation might be preoccupied with finding a job, saving their homestead from foreclosure, or what exactly is the chemical composition of Charlie Sheen's "Tiger Blood," the bank regulators and FinCEN are preoccupied with the Bank Secrecy Act. When it comes to finding a spare regulatory violation or two (or more) to fatten the penalty coffers, BSA is the go-to regulation. I've seen the regulators beat dying banks--banks just a few short months away from meeting their maker--beaten to a bloody pulp for BSA violations. In case any bank hasn't yet gotten the word, be ever vigilant with BSA compliance, and let nothing distract you from your appointed task of doing law enforcement's job.

Another lesson to be taken from the Pacific National Bank beating is the fact that civil money penalties are usually (although not exclusively) based upon the fact that the miscreant bank ignored prior warnings to clean up its act. This important lesson extends far beyond BSA, into all phases of a bank's life here on earth and in its afterlife, as well. Read the complaints filed by the FDIC thus far against former officers and directors of failed banks. You'll notice that one of the common themes that runs through the FDIC narrative is that the officers and directors ignored previous warnings to stop doing something, in most cases to stop concentrating on commercial real estate loans and to improve and/or adhere to loan policies. Blowing off examination criticisms, or even worse, informal or formal enforcement action demands, is akin to lighting up a fine cigar while standing in the hold of an oil tanker. Every time I see it, I shake my head and wonder what is the most appropriate bouquet to send to the mortuary.

A completely unrelated thought popped into my head when I read a story today about the dismissal by a US District Court judge of a class action complaint filed on behalf of former shareholders of Freddie Mac against the mortgage giant. He said, according to the press report, that the plaintiffs simply hadn't proved that Freddie Mac's public disclosures were misleading regarding its exposure to subprime mortgages. The suit was filed in 2008, the same year that Uncle Freddie, along with Aunt Fannie, was placed into conservatorship, and has been slowly working its way to this point. I'm not surprised by the fact that the plaintiffs got the boot (although they can amend and refile). I suspect that many class action lawsuits are filed not with the expectation that if the lawsuit ever makes it to a decision on the merits that the plaintiffs will prevail, but with the expectation that the cost of paying lawyers and the crap shoot that litigation can sometimes become, will eventually induce defendants who have to worry about the bottom line to settle. In this case, it's the US taxpayer who's on the hook, represented by the executive branch of the federal government, so, naturally, there's less accountability for legal costs, and little fear that anyone's job is on the line if the defendant loses. That kind of defendant is likely to hang on to the bitter end. That's bad news for class action lawyers. In this case, it looks like they picked on the wrong "victim" to pursue.

On The Road Again

I'm traveling this week on business and will have little or no time to blog. I'll leave readers with some links to material to keep themselves occupied with actual worthwhile reading for a change, instead of the superficial snark you normally trip over here.

Rob Blackwell, Washington Bureau Chief of American Banker sent me a link to one of the paper's articles from Friday's edition in which reporter Cheyenne Hopkins sets readers straight to the fact that all the hoopla in the MSM about the "imminent" settlement between major loan servicers and state and federal regulatory and law enforcement agencies is a bit of smoke blowing. There are a lot of balls still in the air and anyone of them dropping could derail any "global" settlement. The article is outside the paper's firewall, so people who don't subscribe get a chance to sample the inside scoop presented daily to those who foot the bill.

The ABA Banking Journal had a recent excellent piece by Executive Editor Steve Cocheo entitled "Time to Reinvent the Community Bank?" The answer is "maybe." It's a great analysis of the problems that confront the traditional community bank today. You'll understand why many community bankers who've been in the game for years are starting to feel like the mouse who decides he no longer wants the cheese, he just wants out of the trap.

Finally, the analysis in a recent Banking Law Jouranal by King and Spaulding attorneys Jeffrey Telep and Jane Chen of FinCen's final rule on the confidentiality of SARs is definitely worth a read. All those SARs banks file that end up in the gullet of FinCen's pet goat are, nevertheless, extra special super secret under the law, and regardless of the fact that the vast majority of SARs result in a fit of inertia by law enforcement agencies, if a bank inadvertently leaks the mere existence of the SAR (much less any of its contents) to an unauthorized third party, the bank can end up "rendered" to a third world hell hole where water boarding is what people do for fun on spring break.

Peace, Out.

BSA: The School Of Hard Knocks Continues To Grind Out The Lessons

As I observed this past March, "I would expect that being a BSA Officer would be as much fun these days as being a jihadist caught in an open field in Iraq under a full moon with an Apache attack helicopter hovering over your right shoulder." Add a Texas bank to the list of testifiers to that truth.

T Bank’s failure to meet regulators’ standards for keeping watch for suspicious transactions has landed it more scrutiny and a higher capital requirement.

In response, the 3-year-old North Dallas bank plans to raise an additional $8 million and beef up its audit procedures. The bank already has cut ties with several customers due to concerns raised by the Office of the Comptroller of the Currency/p>

Bank President Patrick Adams declined to comment. But in securities filings, the bank stated it had ended relationships with “customers who were primarily engaged in Internet product sales and a merchant processor who processed payments for those customers.”

[...]

Bank industry groups have complained that requirements under the USA Patriot Act and Bank Secrecy Act are too onerous, and hold the same expectations for billion-dollar institutions and small community banks.

Yes, they do, especially for "small community banks" that service businesses that who process payments for customers around the world. That sort of client requires greater scrutiny than the local John Deere dealer. On the other hand, the complaint's valid, because it requires a big investment in time, technology and money to act as the right arm of law enforcement in stopping money laundering and other nefarious financial crimes. It's an especially galling task when the Feds refuse to act on the vast majority of the suspicious activities that are reported.

The article's author claims that T Bank is "the sole Dallas-Fort Worth bank so far this year to become the subject of a regulatory order from the Comptroller’s Office." That may be true as to formal enforcement actions, but it's "highly doubtful" that there are no other Dallas-Fort Worth national banks who have not been criticized with respect to BSA and anti-money laundering compliance. BSA compliance is a thorn in the side of almost every bank.

We said last week, things are getting hinky with the regulators, and T Bank's problems are further evidence of it.

“They’re tightening up, there’s no doubt about it,” said Chris Kelly, a litigation consultant and former banker with Hill Schwartz Spilker Keller LLC in Dallas.

Smaller banks are an especially likely target, he says.

Yet another nightmare to keep community bankers sleepless. As if they needed any more of those.

Another Great Leap Forward

Hard on the heels of its recent successful stint as the host of the Summer Olympic Games (at least, we understand that they were successful; we never watched anything other than women's beach volleyball), China offers further proof of its rise in the world, this time the world of international banking: it's being sued by Israeli victims of radical Muslim terrorists.

A lawsuit filed in Los Angeles Superior Court claims that one of China's biggest banks transferred millions of dollars for terrorist groups bent on attacking Israel, ignoring demands by Israeli counterterrorism officials to halt the practice.

The lawsuit, against Bank of China Ltd., was brought on behalf of more than 100 victims of terrorism in Israel and alleges that the money was transferred for the militant groups Hamas and Palestinian Islamic Jihad in Iran and Syria, and processed through Bank of China's branches in the U.S. and China. Bank of China, which is one of China's Big Four banks and is listed in both Hong Kong and Shanghai, has the widest overseas network of the nation's banks.

The suit alleges that the money helped fund attacks between 2004 and 2007, and calls on the bank to stop transferring money for terrorist groups. It claims that in April 2005, Israeli counterterrorism officials informed officials of China's public security ministry and its central bank, the People's Bank of China, of their concerns over the wire transfers.

"Most of the banks of the world are not doing business with terrorist organizations," said Federico Castelan Sayre, an attorney representing the plaintiffs. "They chose to do so willingly."

Naturally, the Chinese deny holding talks with any Israeli counterterrorism officials. They also make the implausible assertion that the Bank of China "always complies with the United Nations' anti-money-laundering regulations. Also, our New York branch and related representative offices always follow U.S. banking regulations." Unlike U.S. and European banks, when it comes to compliance with bank regulations, Chinese banks are, like the Pope when acting in concert with the bishops on matters of the Roman Catholic faith, infallible. They "always comply" with the law, never failing, even inadvertently, to hit it on the sweet spot.

On one level, you have to admire the utter cynicism of "The Big Lie." If you're going to tell a lie, at least make it laugh-worthy. US and European compliance officers are bent over double at that one.

However, don't expect the Israelis to find that assertion to be amusing. They tend to treat these matters with the utmost gravity. The Bank of China has now earned a place in the dock alongside such Western counterparts as Credit Lyonnais and NatWest, who have been in the crosshairs of the Israelis for the past few years, and not enjoying it one bit.

Congratulations, and welcome to the First World of Banking, B  of C!

Another BSA Victim

More evidence of the unrelenting brain damage being inflicted upon commercial banks by federal bank regulators over Bank Secrecy Act/Anti-Money Laundering Act compliance failures surfaced last week in press reports that the California national bank subsidiary of Dutch commercial banking behemoth Rabobank Group was forced to sign a supervisory agreement with the OCC to improve its processes and training regarding its security and anti-money laundering activities.

In a conversation with the CEO of a BSA compliance consulting firm last week, I was told that the OCC was the toughest of the federal regulatory bunch on BSA and anti-money laundering compliance. I'd agree, but I don't want to goad any other regulatory agency into getting into a "size comparison" contest, so I'll simply concede that all the federal regulators are equally concerned with BSA and money laundering compliance and all are likely to be equally tough on banks that don't comply.

"Regulators aren't allowing any leeway on BSA," bank consultant Dave Alford said. "It's very strict."

There you go. All you regulators are strict constructionists.

At least in Rabobank's case, while the failures were serious enough to warrant a formal written agreement, they were not serious enough to merit a fine.

"There was no suggestion that there was a failure to file (required documents). The OCC wanted to see better organization and training for compliance," said John Hancock, general counsel with Rabobank N.A., the California subsidiary of Dutch banking giant Rabobank Group.

[...]

The agreement requires better record-keeping, better training and more complete processes for the bank and its employees, he said. Some banks have been hit with big fines for gross BSA failures. Rabobank was not fined, Hancock said.

"The evolution of bank regulations tends to move at a glacial pace. This is a field that is moving quickly," he said.

It's also a field that requires a lot of judgment calls by bank employees, calls that are subject to much Monday morning quarterbacking by auditors and examiners. I would expect that being a BSA Officer would be as much fun these days as being a jihadist caught in an open field in Iraq under a full moon with an Apache attack helicopter hovering over your right shoulder. I guess that's why every job posting I've seen in the last six or seven months for a bank BSA Officer carries with it a salary range that is just below that of a first year associate at a Wall Street law firm. Before the annual bonus that big firm baby lawyers get, that is. Still, it's a lucrative position, yet one that would seem to be thankless at any price.

A perverse sidelight of all of this concern about banks being required to catch the bad guys and to play the role of Junior G-Man in banker's clothing was recently e-mailed to me by a regular reader. While banks need to cross their "Ts" and dot their "Is" where suspicious activities are concerned, if they're defrauded by a borrower on a residential loan, they can wait for the next snowball fight in Hell to break out before the FBI will go after the crooks who caused the bank to suffer a loss. At least, that's the report from at least one source.

In 2006, the FBI studied three million mortgage loans and found that 30 to 70 percent of early payment defaults can be linked to misrepresentations in mortgage loan applications.

[...]

Although lying on a mortgage application is a federal crime, borrowers who committed mortgage fraud are low on the FBI's list of priorities. Joseph Schadler, an FBI spokesman, said investigators will be focusing on organized property flipping rings and bogus foreclosure rescue schemes instead of lying buyers.

'We're going to pick the ones that are the most egregious and have the greatest impact on the economy,' Schadler said. 'Fraud for property is less impactful on the economy than the speculative fraud where people are trying to flip homes for profit.'

That assertion seems debatable, and it sends the blogger off the deep end of the pool, as well it should.

Banks need to beef up their processes, procedures, technology, personnel, and training to smoke out and report suspicious activity (and, as we've previously observed, maybe do much more), all at considerable expense, and to make certain that they don't fail in any respect to comply with the law. On the other hand, the FBI's going to pursue only the biggest and splashiest cases that are uncovered.

As that guy in the Chevy commercial exclaims about the hemmie under the hood: "Sweet!"

To Dream The Impossible Dream

It's not as if we didn't see this coming.

According to yesterday's American Banker (paid subscription required), the US Justice Department is about to hit money services business Sigue Corp "with a record money laundering fine that experts said signals more aggressive enforcement of the Bank Secrecy Act."

To date the Justice Department has fined companies for failing to have an effective anti-laundering program, but according to a copy of the settlement obtained by American Banker, the government went further by accusing Sigue of failing to prevent laundering or investigate suspicious activity for which it filed reports.

"They're reinterpreting, redefining what their [BSA] expectations are," said Robert Pargac, Sigue's general counsel. "Under the Justice order, I think they are saying you just don't have to have your AML compliance program, detect suspect activity, and report it to law enforcement, but it goes a step further, and they are requiring institutions to prevent money laundering."

Outsiders, including Peter Djinis, the former executive assistant director for regulatory policy at the Financial Crimes Enforcement Network, backed up Mr. Pargac's interpretation.

"I don't think any institution could meet the standards that are now being imposed by this agreement," Mr. Djinis, now a lawyer in Sarasota, Fla., said in an interview Friday. "Aggressiveness is fine as long as it's fair. This is changing the rules after the activity is covered and I think that is unfair."

The Justice Department "went too far," he said. Under this standard, even a financial institution that filed a suspicious activity report could be held criminally liable "if they have not done an effective job of uncovering the entire money laundering operation."

Ralph Sharpe, a partner at the Washington law firm Venable LLP and a former enforcement official at the Office of Comptroller of the Currency, agreed with that assessment.

"It has implications not just for MSBs, but also banks and anyone else subject to the SAR filing requirements or BSA requirements, and that is it is not enough to file a SAR or a good SAR, but you've got to take the next step to see if there is something there — some pattern, some abuse — and you have to act on it," he said.

Here's the rub: the company detected the potential money laundering, filed SARs, yet still was fined.

Sigue had an anti-laundering program in place and filed suspicious activity reports on some of the transactions. But in the settlement order, the Justice Department held it liable for not adequately investigating the suspicious activity and for not preventing the broader pattern of laundering.

In all, Sigue identified more than $47 million of structured transactions, but the order said it "failed to take action to prevent from reoccurring."

"Failed to take action to prevent from recurring"? It's bad enough that banks feed SARs into the black hole that is FinCen, where they're eaten by FinCen's pet goat. Now, banks not only have to do law enforcement's job of detecting crimes, they have to prevent them, too. They have to stop the criminals in their tracks, or they'll be hit with a record fine and a deferred criminal prosecution, if they're lucky. If they're not lucky, then what? They get "rendered" to a foreign intelligence service? Waterboarded? Forced to go on a drug free, alcohol free, sex free date with Lindsay Lohan?

We've been yapping like a wee bitty Pekingese for some time now about the ridiculously onerous BSA requirements that are being placed upon banks. Of course, we felt like the canary in the coal mine. Now, the big dogs, ex-FinCen officials and ex-federal banking regulators, are starting to bark loudly. Do you think the US government and federal banking regulators will listen, or just grab a baseball bat and start beating all of us like a pack of mangy curs? Neither. They'll ignore us, as they always do.

Here's an idea for bankers: no matter what your political persuasion, start contributing to a Democratic Party war chest near you and hope that a change in administration and a clean sweep of the Justice Department and the federal banking agencies, at the top levels at least, imposes a modicum of reality on the powers that be. I thought that I'd seen the peak of jack-booted thuggery in the late 1980s and early 1990s, during two previous Republican administrations that I helped vote into power, but they had nothing on the latest circus clowns in D.C. The old boys at least extended you the courtesy of listening to you before they ignored you and proceeded to stone your clients to death like enraged Imams after a teenage girl who left her eyelids uncovered.  The current crop of bank cops doesn't even pretend to listen to voices of reason, even to their ex-cohorts. The only thing a bully understands is power. In this case, it's got to be the power of the ballot box.

Of course, there's always the risk that faces any special interest group when dealing with the boys and girls in D.C.: too many politicians turn out not to be "good politicians," i.e., those who, once they are bought, "stay bought."

Thus, banks may be forced to continue to attempt to do the impossible. And fail, naturally.

So, how are those money service businesses looking to all you commercial banks out there?

Bailing Out The Bad Guys

I wonder how mandatory mediation will work with crooks? According to The Wall Street Journal, "[f]raud goes a long way toward explaining why mortgage defaults and foreclosures are rocking financial institutions, Wall Street and the economy."

The Federal Bureau of Investigation says the share of its white-collar agents and analysts devoted to prosecuting mortgage fraud has risen to 28%, up from 7% in 2003. Suspicious Activity Reports, which many lenders are required to file with the Treasury Department's Financial Crimes Enforcement Network when they suspect fraud, shot up nearly 700% between 2000 and 2006.

In 2006, losses from fraud could total a record $4.5 billion, a 100% increase from the previous year, says Arthur Prieston, chairman of the Prieston Group, which provides lenders with mortgage-fraud insurance and training. The surge ranges from one-off cases of fudging and fibbing to organized criminal rings. The FBI says its active mortgage-fraud cases have increased to 1,210 this year from 436 in 2003. In some regions, fraud may account for half of all foreclosures. "We've created a culture where a great many people know how to take advantage of the system," says Mr. Prieston.

Of course, originators, lenders and Wall Street all made it easy for crooks to steal their money. As The Wall Street Journal notes, a lot of these crooks weren't "rocket scientists."

The evolution of mortgages into a securities instrument turned loan origination into a competition. Caution gave way to a push for speed and volume. Embroiled in an all-out war for market share, issuers reduced barriers to credit, for example, by offering so-called "stated-income" loans, which require no proof of income. "The stated-income loan deserves the nickname used by many in the industry, the 'liar's loan,' " says the Mortgage Asset Research Institute, which works with lenders to prevent fraud. A recent review of a sampling of about 100 stated-income loans revealed that almost 60% of the stated amounts were exaggerated by more than 50%, MARI says.

Obviously, there's plenty of blame to go around. Nevertheless, if 60% of stated-income loans had grossly overstated incomes, meaning, obviously, that Chuckles Schumer's previous rantings about these loans being "liar loans" has a basis in fact, and if crooks were responsible for a large percentage of loans currently in foreclosure (one realtor cited by The Wall Street Journal states that half of the foreclosed residences whose sale he is handling involve borrower fraud), does the rush by government to stem foreclosures make sense? I'm not talking about the federal plan to help a fraction of subprime borrowers, which is a useless endeavor from the get-go, but about all the jawboning, thug-like threats, and public posturing by various state officials who want to "stem the tsunami of foreclosures" that will sweep over their states. People who weren't dumb enough sufficiently unsophisticated to take out a subprime or other loan that they couldn't afford to repay might consider current attempts by state officials to hinder foreclosures by lenders to be a bailout of borrowers that might save some babies, but also will save a lot of dirty bath water.

Then again, 2008 is an election year, isn't it?

I'd love to see a mediator sit down with one of the borrowers profiled in The Wall Street Journal article and attempt to "reason things out." The mediator would half-way home before he realized he was missing his wallet.

A Wake-up Call

Think about world peace; while you're doing that I'll be over here stealing your stuff.
--Jack Handey

We noted this past March that a lawsuit filed by former employees of Dutch bank ABN Amro publicly disclosed a common practice among European banks: instituting procedures to evade US restrictions on funding terrorist organizations and the states that love them. We didn't much like to hear that. Neither, apparently, did the US government.

People close to several European banks say that US regulators and criminal investigators have broadened the scope of a probe that began with the Dutch bank.

They are now examining whether a handful of banks similarly violated laws by processing US dollar payments through US counterparts for clients in Iran, Cuba, Libya and Sudan, countries that – with the exception of Libya after 2004 – are still subject to US sanctions programmes.

Some legal experts say the case against ABN Amro, which promised in April to set aside hundreds of millions of euros to resolve a criminal investigation by the US justice department into its US dollar clearing practices, clarified for the first time the Bush administration’s position and interpretation of sanctions rules and their application to the financial services industry.

Namely, that US banks and individuals are not allowed to facilitate banking activity abroad in which they could not engage directly.

[...]

“As a result, it is a wake-up call for the financial community with respect to the handling of wire transfers by foreign banks that ultimately touch on US-embargoed states,” says Wynn Segall, a partner at law firm Akin Gump in Washington.

I wonder whether the wake-up call will be enough. Maybe a loud pounding on the bedroom door, followed by kicking it in, then spraying the sleepy foreign bankers with semi-frozen yak spit, will be required. If so, I hope that I get to watch.

There has been the expected whining and sniveling from various quarters, along the lines of "everybody does it" and "but you let it go on for so long, you can't  punish us now."

Some people familiar with the investigations, who asked not to be named, say that the looming possibility of financial penalties raises questions about the authority of US regulators to penalise banks for conduct that went unchecked for years.

“This is an issue where the legal lines are not clear. It is the kind of thing that banks around the world engaged in.

That line of pathetic excuse-making never worked for me with my parents, and it won't work on Uncle Sammy.

But if the ABN Amro case represents a model for the kinds of cases that US authorities may be bringing against other banks in the future, as some legal experts believe, then the US government would have a strong case to argue that the violations under scrutiny were not just routine technical blunders.

In the case of the Dutch bank, regulators found that one of ABN Amro’s foreign branches was able to develop and implement “special procedures” for certain fund transfers and other operations “designed and used” to circumvent compliance systems established to comply with US laws.

James Freis, director of the Financial Crimes Enforcement Network (FinCen), a division of the Treasury that investigates money laundering, said last month that “myths” about big penalties for minor lapses in banking requirements should be dispelled and that federal financial regulators were making “great efforts” to eliminate uncertainty about what they expect in a “solid, risk-based”, anti-money laundering programme.

As we understand it, as part of the stepped-up US enforcement effort, those foreign banks that violate US restrictions will henceforth find themselves facing "sanctions" imposed by one US "Treasury Agent" known as Jack Bauer. He hates foreigners, and he isn't real keen on bankers.

Statement on BSA Enforcement

A few preliminary thoughts on the Statement on Enforcement of Bank Secrecy Act/Anti-Money Laundering Requirements that was issued last week by the federal banking agencies, while I was engaged in more serious matters:

• When the agencies state that they'll issue a cease and desist order against an institution that fails to correct any problem that the agency has previously raised with the institution, they are not kidding. They're required to do it by law, and (to quote Hans and Franz): "Hear me now and believe me later" that this will happen. If your bank is criticized for a specific BSA deficiency in a report of examination, senior management and the Board had better take it seriously, because if the examiners find at the next examination that it hasn't been corrected, a C&D will be issued. You'd think that such basic compliance procedures as this would be a problem for a bank, especially in an area that has received so much attention in the last six years, but in some cases it still takes a rap up the side of the head to get the attention of some banks' senior management. Your bank lawyer will defend you, but he'll be shaking his head while he does it.

• Over the past few months, I've received two anonymous communications from different sources, located in different parts of the country, that ask a similar question: Have I seen instances where [insert name of federal bank regulator here] examiners have criticized the qualifications of a BSA officer (one of the grounds for enforcement action), suggested replacing that officer with someone "more qualified" and, when asked for suggestions, suggested a former [insert name of same federal bank regulator here] employee. I can't say that I, personally, have encountered anything quite that brazen, although I have seen instances of criticism of bank officers by examiners that I believed, but could not prove (not being possessed of mind-reading capabilities), were motivated by personal animosity rather than reasoned judgment. It never ceases to sadden me that people with so much power are sometimes incapable of rising above personal pettiness and realizing that when a bank regulator criticizes a bank officer's competence, the consequences for the bank officer can be devastating. You're dealing with someone's livelihood, and that of his or her family. Some sadists and pusillanimous punks enjoy exercising that kind of power, inasmuch as it helps make up for other shortcomings in their personal makeup, but most people who operate within a normal range of human behavior don't want to ruin another person's life unless they're certain that their judgment is correct and that the criticism is not only serious enough to merit the criticism, but that the criticism will be justifiable to an impartial observer. You never know when such action will get a bank's back up and it will appeal it all the way up the line, where a cold eye in D.C., without any skin in the game, is going to ask himself or herself whether there's any basis for spending the agency's resources to fight this further. That said, I've not seen or heard (other than by way of the indirect implications raised in these e-mails) of bank examiners acting as de facto head hunters for their "out-placed" brethren who are in need of gainful private sector employment, and certainly not perverting the examination process to find a buddy a job. Of course, as I've confessed previously: I don't get out as much as I used to.

• The agencies again emphasize how important it is to file those SARs. You know, those Suspicious Activity Reports that are fast-loaded onto a slow boat to Nowhereville. To finish the Statement with that warning is just rubbing salt into the wounds of bankers everywhere. It may be required by the law, but bankers know that for the most part, it's just a waste of time.

Not that I'm cynical.