Yellen Tells Nader To F@#k Off

from LiveMint

Ralph Nader, the self proclaimed protector of the consumer, now wants to save savers. He accosted Janet Yellen, Federal Reserve Chairman, for the zero-percent interest rate monetary policy in The Huffington Post. In his An Open Letter To Chairwoman Yellen From the Savers of America, Nader also told Yellen to she “should sit down with your Nobel Prize winning husband, economist George Akerlof, who is known to be consumer-sensitive.”

from veooz

Yellen didn’t get to where she is now by being a shrinking violet. While she normally let’s idiots yap away, Nader is just influential enough with the right types of people… and since he implied her inferiority to her husband in what seemed to be a veiled attempt at commenting on the general inferiority of women to men, she decided to use her market moving voice to rip Nader a new asshole. (My phrasing, of course.) In her November 23, 2015 response letter from her desk at the Federal Reserve, Yellen politely schooled Nader on basic macroeconomics. Things like how low interest rate has kept the economy from complete collapse, a result that would have wiped out savers. Or how low interest rate has provide price stability, which is necessary for planning an economy, including planning for employment. Or how high unemployment means people needing to dig into their savings to fund everyday costs, making any meaningful interest rate increase a very temporary relief since interest rates would have to increase to the level of spending in order just to keep people’s wealth flat. If one thinks about it, is a very high interest rate since the median savings of a household with an average age of 65 is about $171,000. If people live on $11,770 per year, the line of poverty, interest rates would have to be about 15% per year just to have savers stay even. This is the reason why lowering the interest rate for borrowers to finance new economic-business activity and earning our way out of an economic collapse is far better than charging borrowers a high rate of return for savers. And let’s remember, net-savers are wealthier than net-borrowers, generally.

Here’s a little advice from me to you, whoever is reading this: don’t mess with Yellen on intellectual grounds unless you know you are as smart as she is. And if you know you are as smart as she is, then you are not.

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. 

Which Star Wars character would be the best Compliance Officer?

Star Wars is about a rebels who are seeking to reinstall a democratic system from an empire. It has brought some iconic characters. Let’s take a look at the characters and see what kind of compliance officers they’d make.

Han Solo: A go-it-alone type of guy, though he does have his trusty sidekick/partner, Chewbacca. He makes decisions based on his own understanding of the world. He is not extremely open new ideas without seeing some sort of evidence. He doesn’t like taking orders, though, which is fine for small investigations, but Compliance is a team effort with an organizational structure around it. – 6/10

Luke Skywalker: Naive but willing to learn. Persistent but most of that comes from his personal reasons, which isn’t something that comes up very often in Compliance. He learns to think more systematically, but his wisdom is learned at the cost of his right hand. Pretty steep cost for education. – 7/10

Princess Leia: Has a strong moral compass, but it comes with stubbornness and not very resourceful. She is stubborn and prideful, which doesn’t serve a cause, it just serves her ego. She isn’t resourceful in that she doesn’t take advantage of her uniqueness as the only woman among men, believing that it isn’t appropriate. She is right, of course, but that’s the two sides of morality and resourcefulness. – 7/10

Chewbacca: All instinct, no forethought, his decisions often lead to more damage. He is good at execution, however. He gets things done. He doesn’t get distracted very often. on the other hand, he often does not understand humans, which is a problem in Compliance. Both in terms of managing the business and complying with regulations, he would have to learn to shore up this weakness. – 2/10

Darth Vader: He is deluded into thinking that has chosen the correct path. Once doing so, he is dedicated, competent, and strategic. His management style is a bit of a concern. He kills people when they do not perform. Murder isn’t a management technique a Compliance Officer can condone. – 5/10

C-3PO: Incredibly knowledgeable about protocol, but completely oblivious to applying that knowledge. A serious deficiency that leads him to trouble and many times leads his team into trouble. He only seems to make right decisions under perfect conditions, which, in reality, there is no such thing. – 4/10

R2-D2: Feisty, persistent, exact, stubborn, dedicated, he makes the right decision all of the time. His only limitation is his physical being. But in Compliance, that should not be a problem. One problem, though, is his inability to acquire human language. That’s a problem since managing Compliance on all front require good communication skills. – 8/10

Obi-wan Kenobi: Hermit, once capable, dedicated, persuasive, he would be very good for AML, financial crimes, investigations, or advisory, but he doesn’t really have the best management skills. He is incredibly persuasive, but that does not mean that he can solve every problem that way. Still, he is incredibly adaptable, which is a good skill to have in an ever changing regulatory environment. – 8/10

Boba Fett: Rugged, independent, resourceful, and is a good detective. But he really only works for himself. This is a problem, of course. Compliance is a team effort with an organization and a division of labor. He isn’t likely to fare well trying advise people. He is more likely to get impatient and kill them. – 3/10

Lando Calrissian: A gambler, good at reading people, has his head on straight, is a charismatic leader of a city, he has many connections, he is a very good businessman. He is a well-rounded professional, adaptable. I wouldn’t trust his technical abilities, though. He doesn’t seem like a kind of person who would know how to fix things. – 9/10

Jabba the Hut: Good natured, albeit, deadly. Powerful, leads a very diverse organization with a wide reach. However, he is impatient and likes to be entertained. Compliance is not usually entertaining. Also, he wouldn’t do well being part of a team unless he was leading. He is also vengeful and keeps score. A Compliance Officer has to be able to let go because not everything can be solved right away. – 6/10

Palpatine: Knowledgeable, powerful, learned, patient, strategic, tactically sound, leads a very compliant organization. Considering he was the person who corrupted the senate and took over as emperor, he is willing to break all rules to create his own. He would be a terrible Compliance Officer. – 1/10

Yoda: Wise, funny, knowledgeable, but is impatient and cranky. Patience is a requirement in a function that requires the partnership of other control functions. He has a history of working with other leaders, willing to debate and listen. A very good trait to have in a Compliance Officer. – 7/10

Okay, so, if you want to be a very good Compliance Officer and need a Star Wars character to look up to, look up to Lando Calrissian.

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. 

Week In Compliance: IRS is after rich people

News In Brief

non-complianceIt’s Time to Focus IRS Audits on the Superrich, Inspector General Says by Richard Rubin for Wall Street Journal

“HR departments get a bad rap. That’s because, for better or worse, they tend to excel at enforcing compliance.” by Lisa Nirell for Fast Company 

Common Interview Questions for Compliance Officers by Stella Osoba for Investopedia 

The top 6 Governance, Risk and Compliance certifications by Kim Lindros and Ed Tittel for CIO 

Advisors Take Note: Compliance Officers Are Watching by Bernice Napach for ThinkAdvisor 

3 Tips for Smarter Use of Compliance Technology by Rebekah Mintzer for Corporate Counsel

Banks need to invest more on tech for Basel III compliance: Report from India Times

“Regulatory Compliance LLC, based in Londonderry, is merging with National Compliance Services” by Eli Okun for Union Leader 

Is Compliance Keeping Up With Your Automated Advisory Tools? by Carlos Guillen for Financial Planning

“A new survey from Compliance Solutions at Charles Schwab finds the role of the compliance officer is evolving and growing in scope across corporate America.” by TMC News 


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. 

Pope, the Chief Compliance Officer


The Vatican bank, yes, the Vatican has its own bank, has the notorious reputation for being run like the Mafia. For that matter, it has always been run by Italian cardinals, usually the chief of the Curia, the Vatican government. Last year, its chief, Cardinal Bertone, was forced to step down under charges of financial crimes. Luckily for him, the Vatican is its own micronation and it answers to no one. To make sure Italy does not take over, it is guarded by the Swiss, another secretive organization.

In order to combat this reputations, which seems deserved, Pope Francis put together his person curia of sorts to oversee all aspects of the Vatican, including the Curia of the Holy See. The team of nine cardinals are all non-Bertonians, five of them are not even European… GASP!

I bring this up because November is a time when the Pope goes into his residence and often ruminates on the issues of the people. In 2013, he published his most famous Apostolic Exhortation, which focused primarily on refocusing the church from social issues to socio-economic issues. He did not support contrary views to his predecessors, but he did emphasize that the Catholic Church is not pro-capitalism, and that it should seek ways to help the poor and the sick. He was so clever to avoid changing the established viewed that he even combated the idea of science-vs-religion, and that he believes science explains somethings but it does not and will not ever explain everything, and it is in that knowledge of the unknown that he knows there is a place for God. In 2014, he shook up the Holy See more than the rest of the world by ordering the Vatican to install showers for the homeless. What will he do this  year?

I bring this up because I want to point out something he’s doing that compliance officers can learn from. He is staying well within his powers, explicit and implicit, to make changes. Compliance departments has to be sensitive to the needs of the business, obviously, because ultimately the business exists to help clients. Compliance have to balance that with satisfying regulators that the business has been doing everything its power to stay diligent on maintaining a culture of compliance, strong oversight and controls, and a responsive financial crimes units. Without these, the alternative will be a regulator in every financial institution, and no institution will be able to differentiate itself.

Things you can do:

  1. change the tone of the interactions with the lines of businesses,
  2. talk to regulators more frequently than requested,
  3. don’t make the letter of the law rule decisions.

All of these things do not replace what Compliance Departments have to do, but they do provide a way to make it easier for lines of businesses to deal with Compliance issues, get regulators to understand that you are doing more than defending yourself, and refocus Compliance to the goals of rules, not the technical rules of them.

Of course, if you are intent on doing the least bit possible, I can’t help you. And I would imagine Pope Francis wouldn’t want to help you either.

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. 

Let’s help marketing departments and regulators at the same time

I don’t normally discuss other blogs, but I recently spoke with Jack Kelly, famously from ComplianceX. He reached out to me because he noticed this blog. He shared with him his ambition for his media presence and why he has been so active in social media when his primary business is in Compliance Recruiting.

This post is about Kelly’s Social Media (SoMe) mistake, and how compliance officers can learn to help marketing departments and think from the regulator’s perspective.

NOTE: this is NOT a paid post. However, I can honestly say that I’ve known about Jack Kelly for years and he is reputable. For your firm’s recruiting needs, Kelly’s Compliance Search should be among the top sources. Candidates should also flock to him.

Jack Kelly’s primary business is in recruiting compliance officers for financial institutions. He also has started doing a podcast, has a blog, and has a book. ComplianceX is the blog, Compliance Jobs is job board, but Compliance Jobs TV is on ComplianceX and many of the jobs on the Compliance Jobs is for positions Compliance Search is trying to fill. And his book is a product of what? Him as an expert? Him but published by his recruiting firm? Or is it published by his job board? See the confusion here?

He proliferates his businesses everywhere. This strategy is great for getting awareness, but does not do much else. The transaction cycle for marketing begins with awareness, but it must ultimately lead to a transaction of some sort. That’s why Facebook is a great place to get your products noticed but you would use Pinterest as a possible point of sale. His content allocation is also confusing. While much of Kelly’s material deals with recruiting, about half of what I have been exposed to does not. For this reason, I wasn’t sure if he was fully in the recruiting world anymore when I recently left my firm. I thought maybe he was really just a job board. Plus, his strategy might reach HR professionals, but it does not really reach Chief Compliance Officers. HR professionals reach out for candidates and help with the transaction but the transaction ultimately is made by CCO’s and other compliance leaders.

In order to fix this, he would have to:

  1. make a clear delineation between his media presence and his recruiting work,
  2. hone in convincing clients, firms and candidates alike, to use his recruiting services,
  3. tackle his media ambitions separately.

Convincing clients to work with him for recruiting purposes requires him to share stories about recruiting struggles and successes, his recruiting process, etc. This channel should be embedded into Compliance Search, Kelly’s recruiting firm. The job board can sit separately but does not produce media related to recruiting, which kind of makes it a company that doesn’t produce any media, but at least it wouldn’t be confusing.

Then he can pursue his media ambitions in a variety of ways. He can promote himself as a compliance recruiting expert. He can focus his ComplianceX blog on compliance related issues, opinions, etc. anything but recruiting.

This strategy presents his value proposition in three or four products. Each product targets different needs.

If you work for a small firm where everyone is essentially part of the marketing department, this delineation strategy will help you to create more revenue sources and target the specific needs of potential clients. Sadly, this might also mean that your current clients might only find some of your products useful and stop buying the rest. But as with any strategy, you must give up some of the status quo for the much bigger future.

But this is also important for regulatory compliance. All of the financial regulators have opinions about financial products and they all are suspicious of product bundling. Pooled products used to be a way to reduce costs, making the market more liquid. Now, liquidity is not a concern for regulators. Opportunities for abuse in pooled products are just too big. Just think about the Volker Rule. The purpose of it is to separate transactions depending on the type of client and/or the firm. I provide an example below.

Not all financial products need to be unbundled. Even for Jack Kelly, his activities need not be clearly delineated. Obviously, he is doing quite well without doing so.

The point is this, for business, clear delineation of value propositions sets up the business in a ways that is easily comprehensible for both clients and regulators. It reduces regulatory risk while potentially growing the business.

So, there you have it: Compliance Officers can help revenue centers.

Volker Rule Example: If Client X wants to sell 100 shares of Global Sources and my firm also wanted to sell 100 shares of the same, it would reduce cost to just sell 200 shares at once as a single transaction. Volker Rule does not allow the broker-dealer to pool the shares. The reason for this is that while the sell order goes out as 200 shares, but the actual sales might take place is smaller blocks at various price points, which requires some complicating account to figure out whose shares sold at what price, and so on. 

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. 

Week In Compliance: Senator Warren is portrayed as a communist dictator

Hello on this brilliant Friday here in New York.

from Examiner

Sen. Elizabeth Warren is portrayed as a communist dictator along with CFPB director, Richard Cordray. Se. Warren lashes back via Twitter. – from Sophia Tesfaye for Salon

Speaking of CFPB, Dir. Cordray warned the Mortgage Bankers Association that there is a disturbing lack of effort to implement TRID rules by its vendors. – from Eric W. Mills of McGuireWoods LLP for Lexology

While we are on TRID, OCC warns lenders that TRID exams are coming, attached with some helpful guidance. – from Ben Lane for Housing Wire

“The overwhelming majority of the cases we bring involve CCOs who crossed a clear line by engaging in affirmative misconduct or obstructing regulators,” Andrew Ceresney, director of SEC Enforcement Division. – from Sue Reisinger for Corporate Counsel

“One of the areas we’re spending a lot of time thinking about is the sale of complex financial instruments, particularly as they’re sold to retail investors,” said Stephanie Avakian, deputy director of SEC Enforcement Division. – from Financial Planning at NASDAQ 

East West Bank’s stock took a plunge on Thursday because it failed the Federal Reserve’s AML test. It will be required to collect much more information about customers. – from James Rufus Koren for Los Angeles Times

Los Urabenos crime group of Colombia has been placed on the OFAC Sanctions list. – from Samuel Rubenfeld for Wall Street Journal

Most Compliance Analysts Expect Increased Personal Liability. – from Mani for ValueWalk

Jobs In Compliance

Opinion: Equity-Assets Ratio

It is strange that there are Conservatives who want to raise capital requirements for banks. I thought that was only something Democrats wanted. The annual stress testing of banks by the Federal Reserve is a joke, though. All that work could be avoided with some easier measures without losing any financial engenuity. Actually, there are two main ways to make stress testing pretty much obsolete. One is raising the capital requirements. But that would reduce the money supply in the market, which, if you haven’t noticed, is pretty weak right now. It is so weak that we keep missing the inflation target of 2%. Anyway, raising capital requirements would be the monetary method of solving that problem. The other method is by requiring an equity-to-assets ratio. Currently, there is no such ratio. But what if there was a requirement to have a EA ratio of 10%? This shouldn’t be that difficult. Apple, the largest company by valuation, has a 41%. JPMorgan, the largest US bank by assets, has an EA ratio of 9%. This means that JPMorgan is four times more likely to go bankrupt that Apple. Why would we let our financial institutions be so risky? The economists who proposed this several years ago proposed a 20% EA ratio. This would allow the market to monitor a bank’s health, not the just the Federal Reserve.

How do you like the new weekly round up?

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. 

Week In Compliance: Do you have a penthouse in Shenzhen?

Hello on this hazy Friday here in New York.

Compliance officers are executives and subject matter experts – Mike Scher from FCPA Blog

“General Information Services and its affiliate failed to take basic steps to provide accurate background screening reports to employers about job applicants,” Richard Cordray, Director of CFPB from Law 360

JPMorgan pays $166 Million to CFPB and $50 Million to settle claims to California for cheating thousands of credit-card customers while collecting debts – Peter Blumberg from Bloomberg New

Six Steps to Outsourcing Compliance Technology – from Compliance Digest

Shenzhen Penthouse and conflict-of-interests brings ex-CEO to court for possible seven-year sentence and Hong Kong’s anti-bribery law is questioned. – Wendy Wysong, Partner at Clifford Chance for Corporate Compliance Insight

Compliance Consultants No More!… Maybe… “What’s intriguing about this case – and what makes it all the more important – is the way that it has morphed from a “simple” alleged undisclosed conflicts of interest case into a case that calls into the question reliance on compliance consultants.” – Chris Stanley, CCO of Loring Ward Group for Think Advisor

Whistleblowers are still very likely – from Dodd-Frank Update

Standard Chartered plans to cut 15,000 jobs, increase digital banking and compliance automation – Renee Caruthers at Fierce Finance IT

Jobs In Compliance

Opinion: Is there a big opportunity in Compliance Media? 

I have been listening to a podcast called StartUp. It is produced by Gimlet Media. It is in its second season and each season they intend to follow a startup company. They introduced me to something called a lifestyle company. A lifestyle company is a company that supports the lifestyle of its owners and employees. Successful, yes. Global? No. In the show, they were following a company called DatingRing, an online dating site trying to disrupt the online dating world. While the founders were really smart and enthusiastic about it. But I had my doubts. What about all of the other dating sites? They would probably argue that since launched, there have been several successful online dating sites: OkCupid, Tinder, Coffee Meets Bagel, to name a three. The reason I was doubtful was because they weren’t offering something that was possible to scale. Match brought personal classifieds online in a palatable user interface. OKCupid brought social networking to dating. Tinder brought gaming to dating. Coffee Meets Bagel made everyone on Facebook a matchmaker. All of these things used technology to facilitate the matching and let the humans do the dating. DatingRing brought group dating on demand? The idea was that you could have a date that night if you wanted to? But it was a blind date, with no other connection except this dating service? Not that it couldn’t happen. It did happen. The problem was that it didn’t actually solve the matching problem, which is qualitative. They just thought if they had users, the matching would happen. But group dating, when scaled, is just a large party. When not scaled, it is a blind date setup by people who don’t really know you and have no connection to you, which leads to low probability of success. I mention this because I feel like I am at the point of trying to decide if my business is going to be a global media business or a lifestyle business. Right now, I can only hope to make it a lifestyle business, but I can’t really ask for money from investors for a lifestyle business. But I do have a big dream for this enterprise. I wish this would be the,, JDSupra, of the Compliance world. There are some big players in Compliance Media, not no company has as much traction as the above mentioned for law. I could have chosen other industries to do the same analogy, but you get the idea. How do I make such a narrow and new function in the financial services industry something worth monopolizing?

How do you like the new weekly round up?

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.