Louisiana Bankers Notes Blog


LBA Board & Officer Selection Banker Driven

Last year, the LBA did a survey of Louisiana bankers to get guidance on some legislative issues, including flood insurance given the flooding around the state, capital standards, examination experience, shareholder return expectations with the increasing time and expense with regulatory requirements, along with a few questions ranking banker top concerns. Also included were two questions aimed at LBA accountability. One asked if there are items the LBA should do that that we are not doing. The other was this: Do you believe the LBA Board of Directors, and bankers generally, appropriately oversee the operations of the LBA to assure the LBA staff is focused on the priorities of your bank? All 97 respondents answered yes. That response was and is very gratifying to us here at LBA as it indicates a level of confidence in the oversight and direction of the Association by Louisiana bankers elected by their peers to represent them. The LBA by-laws provide for the election of the Board by the members of the LBA. The by-laws were rewritten in 2008 by a committee of the Board with LBA General Counsel David Boneno assisting. The by-laws require that, to be considered for election to the board, a banker must first be nominated by a banker. The nomination forms are sent to all member banks. There are some minimal qualifications in the by-laws that focus on involvement with the LBA so there is some familiarity with the Association. The nominations for regional directors are provided to the sitting director of that region, and they, in turn, gather past directors from the same region and make a recommendation that goes before the membership for approval at the annual convention business meeting.  

Nominations for LBA Treasurer are now being requested. The forms have been sent out, and we provide them at the LBA regional lunches as well. The treasurer eventually becomes chairman and is a four year commitment. Nominations are considered by the Executive Committee of which there are six. The four officers (chairman, chairman elect, past chairman and treasurer) and two regional board members elected by the Board to serve on the Executive Committee. These six meet to select a recommendation they present to the full board for consideration. The board elects the treasurer. Please consider sending to me a banker you believe would make a good treasurer. The by-laws provide a good process, and most of the time a good process has good results. It all gets back to the bankers in this state and their taking the time and attention to keep us here focused on the needs of your institution.  



Military Leadership & Ethics, Continued

In an article by Dale R. Wilson in June of 2016, he writes about leadership and ethics and our military service academies emphasis on this training. Here is an excerpt from that article that is timeless in its lessons for us today.

Character is the foundation upon which all leadership traits are built. Moral and ethical behavior is where leadership becomes the bedrock of who we are as individuals and as leaders. Its strength comes from the fortitude to always do our best and to always do what is right, no matter what may lure us away from making the right decision. The four cornerstones of this foundation are the values of integrity, respect, responsibility and professionalism. Or, to use a different and more common metaphor, these become the four points on the moral compass. They are the core values of a leader that lead to uprightness and success.

No matter what our challenges happen to be, either driven by stress or human urges, we must reach deep within ourselves to overcome the temptation to make poor decisions, whether we are in uniform downrange, or engaged in the activities of daily life with our family or friends. Our country, society, superiors, peers, subordinates, family and friends are relying on our steady and consistent moral courage to translate into professional decorum and behavior; always.

Many respected military leaders of the past espoused the vitally important qualities of a leader. Lieutenant General John A. Lejeune, the 13th Commandant of the Marine Corps said, “Leadership is the sum of those qualities of intellect, human understanding and moral character that enables a person to inspire and control a group of people successfully.” Among General Douglas MacArthur’s 17 Principles of Leadership, which essentially acts as a leader’s self-assessment questionnaire, there is this question: “Am I a constant example to my subordinates in character, dress, deportment and courtesy?”

An excerpt from the West Point Cadet Prayer reads, “Make us to choose the harder right instead of the easier wrong and never to be content with a half-truth when the whole truth can be won. Endow us with the courage that is born of loyalty to all that is noble and worthy, that scorns to compromise with vice and injustice and knows no fear when truth and right are in jeopardy.”

The trailhead to success was clearly identified early in our lives and careers. Ultimately, it became our responsibility to continue to travel along a wholesome path. But, at some point in our lives, we find ourselves at the intersection of human-nature and temptation, faced with the challenge to make the right decision. When this happens to you, which way will you go? Will your moral compass point you in the right direction? Is the foundation of your character strong enough to stand firm? Or, will your character crumble to the ground? What will your leadership legacy be? Lessons learned through life’s experiences, as well as the awareness and attentiveness to your surroundings, should always provide you the sense of direction necessary to make the right decision. You must have courage, faith and confidence that your moral compass will point you in the right direction; the path toward the intersection of character and integrity. If your ultimate destination is success and victory, follow your moral compass.



Military Leadership & Ethics

In an article by Dale R. Wilson in June of 2016, he writes about leadership and ethics and our military service academies emphasis on this training. Here is an excerpt from that article that is timeless in its lessons for us today.

In military and civilian academic institutions around the world, above and beyond their core curriculum, character is taught and inspired. In each of the military academies in the United States, as well as college Reserve Officers’ Training Corps programs, the purpose and responsibility is to produce leaders of character. To accomplish this, they work to incorporate the values of integrity, respect, responsibility, compassion and gratitude into the daily life of cadets and midshipmen who aspire to become tomorrow’s leaders. 

The U.S. Naval Academy’s mission, for example, is to develop midshipmen morally, mentally and physically and to imbue them with the highest ideals of duty, honor and loyalty. They aim to provide graduates who are dedicated to a career of naval service and have potential for future development in mind and character to assume the highest responsibilities of command, citizenship and government. The Naval Academy has a deep and abiding commitment to the moral development of its midshipmen and to instilling the naval service core values of honor, courage and commitment.

The U.S. Military Academy at West Point has a character development strategy (click here to download a copy) to promote living honorably and building trust. West Point believes their approach not only develops character, but modifies behavior over the course of the 47-month cadet experience. Ultimately, the desire is for cadets and rotating faculty members to depart West Point with the character, competence and commitment to build and lead resilient teams that thrive in complex security environments. Most importantly, everyone commits to living honorably and building trust, on and off duty.

The U.S. Air Force Academy has the Center for Character and Leadership development (click here to go to the website), where they advance the understanding, practice and integration of character and leadership development as a catalyst for achieving the academy’s highest purpose—developing leaders of character—while also preparing the cadets for service to the nation in the profession of arms. I think the Air Force Academy has it absolutely correct when they say there has never been a more critical time to increase understanding of how moral and ethical dimensions interact with the complexities of leadership—not only in the military context, but across many fields of human endeavor.


Those who possess leadership characteristics seek to discover the truth, decide what is right and demonstrate the courage to act accordingly—always. Officers in the military are to epitomize humility, self-effacement and selfless service. So, at the basic and academic level, before the bars are pinned on a newly commissioned officer, candidates are taught the importance of equality, dignity and respect.



Fair Lending Reform

The LBA has made an effort to highlight and advocate reform in fair lending examination and enforcement of alleged violations. My attention to this is due to conversations with Louisiana bankers and the experience they communicated to me about their fair lending examinations. I have another meeting with a Louisiana bank later this month to talk about their experience. Through these conversations, I am convinced that the examination process in its enforcement of the disparate impact doctrine is flawed. The standard of “pattern and practice” in determining an alleged fair lending violation has been stretched to be meaningless with respect to community banks. It is not even worth considering that Wall Street banks are held to the same standard, as it’s inconceivable that a few loans could be singled out through their exam, or that they could be referred to the U.S. Department of Justice in such an instance. Community banks appear to held to a higher standard. 

When writing or speaking about this, it’s always possible those listening will misinterpret this discussion to somehow mean that it’s really about permitting unfair lending. We all know community banks are focused on making good loans and helping their communities grow and prosper. Purposeful exclusion of any part of their community is self-defeating. 

The LBA has had several approaches on this issue. On flood insurance, we tried to get the interest of others on the idea that bankers could safely be trusted to determine which of their borrowers should have flood insurance on properties outside the flood hazard zones without fear of violating fair lending. After the flooding in 2016, when so many areas outside of the flood hazard zones were flooded, we had many conversations about permitting bankers increased leeway on requiring flood insurance. The results would increase the safety and soundness of the bank, position the community to recover better and add needed premium dollars to the NFIP. The fair lending concern makes this a big lift. 

Another approach was to amend federal law that currently requires federal banking agencies “shall refer the matter to the Attorney General whenever the agency has reason to believe that one or more creditors has engaged in a pattern or practice of discouraging or denying applications for credit in violation of section 1691(a) of this title.” The use of the word “shall” apparently gives little or no discretion to the federal banking agencies. I know, through a conversation with a person that worked at one of these federal banking agencies, that referrals are made that the agency staff believe should not be done as the alleged violation did not rise to the level to warrant such a referral. But under current law, they shall, which sets off the series of expensive and anxiety producing months or years. Generally, they get kicked back to the banking agency anyway. We would like to change “shall” to “may”. The banking agencies have the authority to enforce and resolve the issue in a more timely manner and with the same result. 

The other approach, or in addition to the above, is to legislate the meaning of “pattern and practice” as used to define an alleged fair lending violation. Our thought and in consultation with many attorneys and our national association partners on the language is to establish de minimis number of alleged loans in violation of fair lending that could result in a referral to the Department of Justice. Some meaningful number that could more represent a “pattern and practice”. 

Recently a new tack has been initiated: to prohibit or severely restrict the referral of any community bank to Department of Justice. My experience with Louisiana bankers in a fair lending exam is the examiners may focus on a very tiny number of loans that cannot be considered a “pattern or practice” by a common sense standard. At our request, Sen. John Kennedy has written a letter to the federal bank agencies, along with Sen. Thom Tillis of North Carolina, requesting the data on community bank referrals to Department of Justice. I want to know the percent of banks referred that are later kicked back to the banking agency for resolution. If this is a high percent, then it raises the question as to why these referrals are even made since the banking agency is the final arbiter anyway. The primary concern for policy makers is getting to a remedy for any violation. If that can be done, and is being done, through the banking agencies, then why not eliminate Department of Justice. 

One focus of mine is the general wear and tear bankers experience today in their work, what I have heard some refer to as ‘banker fatigue’. If community bankers know they can’t be referred to Department of Justice over an alleged fair lending violation, that would be a tremendous weight lifted, and the bank and the banking agencies can quickly get to a remedy and move on. 

Finally, I am pleased to report that a joint letter, with signatories that include American Bankers Association and Independent Community Bankers of America, was sent to Attorney General Jeff Sessions requesting a meeting to discuss “the Department’s approach to enforcement of fair lending laws. We believe that this Administration has an opportunity to align fair lending policy with Supreme Court precedent and address constitutional concerns regarding the consideration of race in decision-making. Indeed, in a fair lending matter pending in the Northern District of Illinois, the Department recently espoused a concerning position of the previous Administration, which the Court then adopted. Other deadlines demanding the Department’s views are approaching.” The letter continues “the actions of the Department to date appear to further the prior Administration’s policy, and with other court deadlines fast approaching, we ask that you allow us to represent our concerns to you before other decisions are made.”

Fair lending, like the Community Reinvestment Act and Bank Secrecy Act, and other items, need reform. Let’s hope we can see some progress.