One of the most important things about running a bank is to comply with all of the regulations. Banking is a unique industry for any economy with a central bank because the central bank has the incredible power to increase the supply of money or lowering the amount of assets a bank needs to have against the money it borrows from the central bank. This is the nuts and bolts of running a bank, even today.
But one look at the list of bank CEO’s across the country and you cannot see even one banker. Most of them got to where they are by management promotions. Some of them came up from managing revenue side of a business, generally investment banking. But, for the most part, the rest are managers. None of them managed bank’s relationship with regulators.
So, the answer to my question is “no.” Your bank CEO is hardly likely capable of running a one-man bank if it came down to that.
This, then, should come as no surprise when bank CEO’s do not see compliance as a cost of doing business but a cost that should not even exist.
I feel for CEO’s who have a background in customer service of some sort. At least they have a background in the revenue side of the banking business. For those who have that vantage, banking is often a service that competes with other services and they don’t see business any differently because they are in banking. But, still, who are they kidding? No other business can run for decades with only 3% of their accounts being equity. No other business can have 97% of its assets securing its liabilities. No other business can borrow money every night below prime rate.
This is the reason why having the top manager of a bank who’s right hand is his regulatory expert is paramount to a good bank governance environment.
Of course, this isn’t going to happen in the United States.
Kim Kardashian has a book out that is just selfies; have you read it?
About the Author: M. C. Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.