Thomas J. Curry, now the Comptroller of the Currency in the U.S., recently penned an opinion piece on how public trust in banking, vital to a healthy economy, has largely been lost in recent years and how banks must rethink their corporate risk culture if they want to set things right.
Of course, we’re all familiar with why people have lost trust. It has to do with poor debt collection practices. Weak oversight of trading actions. Bank Secrecy Act control lapses. Numerous mortgage foreclosure and servicing abuses. Collectively, penalties for these wrongs have climbed into the billions.
While Curry doubts any senior manager expressly approved these actions, he asserts these poor practices were the result of weak risk management and risk culture within large financial institutions. Ultimately, that is senior management’s job.
Our Miami foreclosure defense attorneys understand the fixes Curry suggests are largely already in place, outlined by the National Banking Act of the 1860s. Somehow, he says, we have diverged greatly from those basic principles.
When the act was first passed, under President Lincoln, the charter demanded banks develop policies to manage risks in ways that would not compromise solvency. That meant strict adherence to the laws. It meant maintaining good faith and trust among customers and communities. It meant being held to a higher standard of integrity.
Though Curry concedes much has changed in the banking world since the first Comptroller of the Currency took office in 1863, he insists those same principles remain true. When banks fail to adhere to these standards, it effects not just the banks but the communities at-large.
The crisis of 2008 was perpetuated in large part by big banks that engaged in practices that would negatively impact consumers – in direct violation of those very basic NBA guidelines. Curry believes the only reason we avoided another Depression is because of the federal bailouts to these institutions.
Following that, a series of new laws now hold these institutions to higher standards of liquidity, capital and risk management. For the OCC’s part, it recently finished with the introduction of new higher standards for risk management and control procedures for companies with $50 billion or more in assets.
Curry noted this has, for the first time in years, resulted in at least one opinion poll (from Gallup) suggesting a positive marks from the public on the practices of the banking sector. Still, Curry said such views are “fragile.” Whatever trust has been rebuilt over the last two years (and our consumer protection lawyers tend to believe it’s been overstated) could be eroded quickly.
The fact is, the financial crisis resulted in many Americans losing their homes, their jobs their financial stability. These were things they spent a lifetime building. Shady practices by large financial institutions, servicers and others were largely behind these woes. There is no quick fix, and building up trust will take time.
The new OCC standards for banking were added as an appendix to Part 30 of the agency’s regulatory guidelines. The new rules lay out enforcement. When banks fail to meet these basic standards, the agency has the authority to require the draft and submission of a timely compliance plan for correcting deficiencies.
Curry hopes these standards will serve as a beacon to ensure these companies don’t once again lose direction and sacrifice people for bigger profits.
If you’re battling foreclosure in Miami or the surrounding areas contact Bruce Jacobs & Associates for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.
Unwritten Rules: The Importance of a Strong Risk Culture, Q3 2014, By Thomas J. Curry, Comptroller of the Currency, The Clearing House
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