United States: Mississippi Regulatory Compliance Group Quarterly Report, Vol. 29 No. 4

When I was in high school, we had to master Roberts' Rules of Order to participate in Mississippi's Youth Congress. One of the first things I learned was the proper use of a "Point of Personal Privilege", an opportunity for a participant to express some thought, sentiment or other thing on his or her mind or heart. Please indulge me while I ask for a point of personal privilege.

At the end of this year, I will be retiring from the active practice of law. I will not be "leaving" Butler Snow - one does not leave Butler Snow (it is a little like the Hotel California --you can check in, but you never can leave). But, this is my last time to help prepare a newsletter for distribution to all of you, and my last time to take an active part in one more Quarterly Meeting. So, it is an appropriate time for me to reflect.

I owe so many people so much. I started in 1973 as a recently graduated lawyer in Deposit Guaranty's Legal Department, working under its General Counsel, John Maloney, and its Assistant General Counsel, Bob Barnett. John and Bob could not have been more kind or more helpful to me in so many ways. My career would have been very different had it not been for their encouragement, their confidence, and their willingness to let me take an active role during a time of unprecedented change in the world of banking law and regulation.

From 1973 to 1978 numerous laws and regulations were adopted to complement the Truth in Lending Act which was already on the books. I was the low man on the totem pole, so ECOA, HMDA, RESPA and a number of other laws and regulations landed on my desk. I saw that development as a sign of job security. I never contemplated that that experience would later prove to be the foundation of a law practice.

1978 was a great year. We hired Cliff Harrison, also straight out of law school. I was no longer the bottom of the totem pole, but more importantly, Cliff was, without a doubt, the smartest lawyer I had ever had the pleasure to work with -- still is. I could shift a lot of work to Cliff - and I did.

Deposit Guaranty was a national bank, regulated by the Comptroller of the Currency. It was the firm belief of Deposit Guaranty's management that the OCC was the best and the toughest regulator and that Deposit Guaranty would be a better, safer bank as a result of that regulatory guidance. Admittedly, that was before compliance with all of the aforesaid laws and regulations (with more yet to come) became such an issue.

I still remember the day when Julian Clark, Deposit Guaranty's president, sent me a copy of a letter from the OCC to all national banks that said, in so many words: it has come to our attention that there are all of these laws and regulations on the books, but that many of you are not doing much to comply with them. You must immediately appoint someone with sufficient expertise and authority to assume responsibility for your bank's Compliance Program. I became Deposit Guaranty's first Compliance Officer. (I am still not sure how Cliff ducked that one.)

The other regulators soon followed suit, and all banks found themselves engaged in the frustrating task of developing compliance programs tailored to their particular operations.

Time flies when you are having fun, and in 1985 I was approached by Butler Snow about joining the firm to develop a banking law practice. One of the first things I did was help with representing Deposit Guaranty in its suit against the Mississippi Department of Banking to gain authority for Deposit Guaranty to branch statewide. We were successful in a case that went all the way to U.S. Supreme Court, and Deposit Guaranty got the state-wide branching authority it sought. Deposit Guaranty was Butler Snow's biggest client, and they were very pleased, but many community banks throughout Mississippi were not so pleased about suddenly having a new competitor. What a burden to overcome if you wanted to develop a state-wide banking practice!

But the regulators were our unwitting accomplices. They significantly stepped up the pressure on banks of all sizes to develop their own compliance programs, and particularly their own compliance policy manuals.

Realizing that every bank needed a legal department, and almost no bank could afford one, we came up with the concept of the Bank Group (originally the Mississippi Regulatory Compliance Group - MRCG), allowing a large number of banks to pay a flat rate to have a Compliance Manual developed and maintained in a format that could be tailored to each member bank's unique needs. Quarterly Newsletters and Quarterly Meetings for training and educational purposes rounded out the concept.

The MRCG started in August 1989 (near the end of the Savings and Loan collapse) and was later followed by the Mid-South Regulatory Compliance Group (MSRCG) out of Butler Snow's Memphis office in 2002.

Our goal has always been to aid the regulators in their activities by giving our bank clients the training, advice, knowledge and procedures needed to satisfy regulatory requirements. At times there were tensions, but our view has always been that, although the regulators may not always be 100% correct, they are always the regulator 100% of the time. The plan was always to help banks find the best, most effective and profitable way to satisfy the regulators. That is still our approach.

This approach has worked well over the years. In the recent May Quarterly Meeting, Everett Fields, one of the FDIC's most respected Fair Lending Specialists, congratulated all of you for the excellent job you have done over the last 15 years to meet the burden of Fair Lending compliance. He gave each of you credit, but he also pointed to the role that the MRCG and the MSRCG have played in helping you achieve that result. That is exactly what we have been striving for over the years.

Which brings me to the present. Today the bank regulatory environment is in something of a state of flux. Current efforts to "reign in" the Consumer Financial Protection Bureau makes for good soundbites, but runs a significant risk of backfiring in the not too distant future. We should all look to recent history and what happened to the savings and loan industry when it was deregulated. It quickly collapsed. Even worse happened 15 years later when banks were freed from geographical and line of business restrictions. The so-called "financial crisis of 2008-2009" was the result.

I feel confident in saying that today your bank has one of the best and the strongest compliance programs of any bank your size, anywhere. I have had the pleasure of watching you and your staff (past and present) work hard to satisfy the regulatory requirements handed down. You have done an outstanding job and deserve all of the good things Everett Fields had to say last Spring. I want to implore you to continue on with those efforts and the progress you have made. With, Cliff, Memrie, Patsy, Susan, Lisa and Dyanne still working to support the MRCG and the MSRCG, you are in the best of hands.

Although it is hard to say just what the future holds short-term, it seems easy to say that there will always be FDIC insured financial institutions and regulators to monitor them. That means there will always be a need for compliance officers and compliance support staff. And over 45 years I have never seen any significant regulatory burden reduction take place -- change - yes, reduction - no. I do not expect the future to be any different.

Finally, I want to thank each of you for allowing me to play a part in Butler Snow's representation of your Bank and the development of your Compliance Program. Without you, my law practice would have been very different, and not nearly as enjoyable. So, thanks!

I still plan to come to some meetings and other activities, so I hope to continue seeing you for a few more years. It is hard to retire cold turkey and even harder to pass up the occasional free lunch.

Thanks again for so many good years, good memories and good friendships.

<Ed Wilmesherr>

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