Wis. Group One bankers urged to look at compliance

A compliance management system is the key to a harmonious relationship with your regulator, said Maureen Fassbinder, internal audit and compliance senior manager with Wipfli. She was one of a half dozen presenters at the Wisconsin Group One meeting conducted Feb. 12 at the Radisson Hotel in Bloomington, Minn.. Fassbinder said a compliance management system consists of board involvement/oversight, training, testing and a compliant response mechanism.. In survey after survey, Fassbinder said bankers identify regulatory compliance as their top concern. She encouraged bankers to give their compliance officers the tools they need to succeed, including sufficient time to do their job. "A compliance officer has to do a lot of reading," she said and they should be given sufficient time to do it. She also said a compliance officer needs management's "moral and public backing.". Compliance people should be included "up front" on bank initiatives, she said, because it is much easier to create a compliant program than it is to go back and retrofit a program for compliance once it has been created.. Studying material loss reviews conducted by the FDIC after bank failures, Fassbinder said the most common reasons cited for bank failures were failures on the part of bank management to pay attention to exam findings, and failure to correct material compliance deficiencies.. Fassbinder said it is easy to leave compliance up to the compliance officer but she said everyone in the bank is responsible for compliance; the officer simply coordinates it across the organization.. One other recommendation from Fassbinder for winning regulatory favor: have a director sit on the compliance committee – even better, make sure the director is an outside director.. Wisconsin Group One is made up of 20 counties in northwestern Wisconsin; the group meets in February for its annual business meeting, and in July for a golf outing. Long conducted in either downtown Minneapolis or Saint Paul, group leadership decided to conduct the meeting near the Mall of America, in a hotel with one of the state's largest water parks. Group One President Robert Strohbusch, Charter Bank, Eau Claire, said they made the venue switch in order to attract younger bankers with families.. Gayle Appelbaum of the bank compensation consulting firm McLagan, told bankers that good bankers are getting calls from headhunters more than ever. She encouraged bankers to closely consider their compensation policies.. New rules, she said, actually require "clawbacks," that is, efforts to retrieve money that was paid out inappropriately to employees as much as three years ago. She said this is uncharted territory with questions surrounding former employees who have retired or entered other professions. She said the tax implications are not clear.. Bonuses which used to compensate bank employees for making loans should now include provisions which take into account the quality of the loan. She recommended setting up bonuses that are paid out over time, and withheld – at least in part – if one or more of the loans go bad.. Clare Zempel, an economist with the Milwaukee-based Zempel Strategic, offered bankers a positive economic outlook. He noted a strong stock market, the positive purchasing manager's index, and a wide gap between short term and long term interest rates as positive signs. And, while unemployment is high, he noted that new unemployment insurance claims are declining.. Zempel also said exports are strong and that while housing prices have dropped, they are now in an affordable range that makes home ownership much more manageable for most people. Home prices in relation to income are back to reasonable levels, he said, similar to conditions 10 years ago.. He said interest rates are going up, predicting the Fed Funds rate will rise to around 5 percent in three years or so. He said he thinks stocks remain undervalued.. Zempel said that looking at the economy on a macro scale, Americans are enjoying a robust economy. Real U.S. income per capita, he said, in 1947 at $8,000 per person. It has gradually climbed — $16,000 in 1974; $24,000 in 1996, and $32,000 in 2007. The American economy is strong, he summarized, suggesting the best thing anyone can do in order to understand the economy better is turn offer MSNBC and other major news outlets.. The meeting also included comments from Wisconsin Bankers Association President and CEO Kurt Bauer, and Wisconsin administrator for the Department of Financial Institutions' Division of Banking, Michael Mach. (See the March 1 issue for comments from Bauer and Mach.)