Week In Compliance: White people get better interest rates on loans

The CFPB and DOJ determined that more than 235,000 minority borrowers paid higher interest rates for their auto loans between April 2011 and December 2013 because of Ally’s alleged discriminatory pricing system. – ACA International

The Chinese government, which has long used its country’s vast market as leverage over American technology companies, is now asking some of those firms to directly pledge their commitment to contentious policies that could require them to turn user data and intellectual property over to the government. – Paul Mozur at The New York Times

Though many small to mid-sized financial institutions (broker/dealers or registered investment advisors) have the requirement to manage customer complaints, still they do not have the need nor resources to employ a complicated and expensive system. 17a-4, llc has developed a workflow / retention solution using the Law Department DeskTop to provide a solution starting at $600 per year. – PR Web

A stock broker in New York admitted Wednesday that for five years he traded on inside information stolen from one of Wall Street’s best known law firms (Simpson Thatcher). – Richard L. Cassin for The FCPA Blog

This is not saying, however, that Operation Choke Point is dead, but only that it is being dismantled. – Richard Kohrumel of FTI Consulting for ACAMS Today

CFPB has released an infographic regarding the new mortgage lending standards. The new standards simplify the organization of the loan information for borrowers. This takes into effect October 3, 2015.

Click to enlarge
Click to enlarge

Jobs In Compliance

Opinion: Don’t discriminate against banks, apply IHC rules to all companies 

You may or may not be aware of this but foreign banks are required to create a Intermediate Bank Holding Company as both the shareholder and operator of its various financial services operations in the United States. This may see small, but because of the way this is applied, it goes against the fundamental American belief that the economy works best when it is fair. So, why is it that only financial institutions are required to create an umbrella company? Why  not all foreign entities.

I understand the need for IHC’s: accountability. When something goes wrong, we want prevent accountable parties from abusing safe harbor rules to dodge punishment. In the case of financial institutions, if they have access to the Fed Window, then they have access to the printer of our money. We would like heightened controls on these entities. By requiring IHC’s organization, the Fed is forcing foreign financial institutions to take operational ownership of its umbrella entities. This ownership varies, but at least if something goes wrong at a Midwestern bank owned by a European Megabank, the European Megabank will be punished, forcing it to take a look at whether the Midwestern bank is worth owning without careful due diligence and controls.

But why not do this for all foreign entities. If a German firm owns a number of unrelated factories, why not make the German firm create an umbrella organization to hold it. All of this organization’s US operating assets will be placed in it. Now the operating risk is spread across the umbrella organization. That means, the German firm cannot create a “bad factory,” we sometime do by creating “bad banks.” The result is a well endowed foreign firm will have to look at all of its US business as a single portfolio. This firm can get in and out of any business as it did before, but when in, it must accept that it is not shielded from the liability that comes with ownership.

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Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses. He is a member of ACAMS and ACFE. 


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