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By stu lehr, CrCM
He;otHer;siDe
compliance in paradise
What Could Be Better than livinG and WorkinG in ha Waii? simple: vacationing in hawaii. i should know—i worked for a little over a year at one of the larger banks there (a fond “aloha” to all my former colleagues). not that hawaii’s a bad place to work, but despite being the most remote islands in the entire world (there is no significant land mass for at least 2,000 miles in any direction), those little rocks
in a big, big ocean are still subject to all of those pesky regulations.
Even if you haven’t worked in Hawaii,
you might have some idea what it’s like if
your mainland office is located in Malibu,
or along Miami’s South Beach: on weekdays
you are heading to your office, briefcase in
hand, facing a day of dealing with regulatory
issues and petulant business managers, and
on your way you see smiling tourists with
beach bags in hand, facing a day of dealing
with what level of sunscreen to apply and
where to have lunch.
Hawaii is special in many ways. It’s the only
state that used to be its own kingdom (and
the loss of sovereignty is still a contentious
subject there). At the same time, don’t make
the common mistake when you’re visiting by
referring to the place you come from as “back
in the States” because you are, in fact, still in
the United States when in Hawaii.
Another of those special differences is the
rich diversity of people; Hawaii has the most
diverse population of any place in the world.
It truly is a “melting pot.” That concept gets
more than a little interesting when a federal
regulator from the mainland comes to a bank
on those fair islands and wants to conduct a
fair lending review.
The regulator’s first big question: who is
your control group? On the mainland that is
rarely much of a question, but on the islands
of Hawaii, according to U.S. Census Bureau
statistics, “white persons” are only 30 percent
of the population (as opposed to 80 percent
on the mainland). Even the Native Hawaiian
or other Pacific Islander population constitutes only 9 percent of the total. In contrast
to 5 percent on the mainland, people of Asian
descent make up the largest single segment of
the population at 39 percent, but that’s still far
from being a majority population. On top of
that, 18 percent of Hawaii’s population (nine
times the number on the mainland) report
that they are of two or more races.
Undaunted, the resolute regulator from
the mainland insists that even without a clear
majority, and heck, even without HMDA
data, he or she has some proxies with moxie.
“We will apply this fabulous technique
where we use the last name to determine
race,” he or she says.
“Oh really?” the wizened islanders reply,
thinking of last names for married couples
where 50 percent of the marriages are racially
mixed. On top of that, most of the locals’
MAY | JUNE 2010 aBa Bank compliance 36
Hispanic-sounding last names belong to islanders of Filipino descent.
“Sure,” the ever-confident regulator says,
“We’ve used it in California!” There on those
lovely islands the residents just smile knowingly at each other, shrug their shoulders, and
give in to the inevitable.
Afterward, life returns to normal on the
islands. The locals know that all they’ve got
on these little rocks in the big, big ocean is
each other, so pretty much every type of
cuisine is “fusion” cuisine, holidays (the ones
you were already familiar with, plus the new
ones from cultures you’ve discovered there)
are celebrated by everyone, and all visitors
are warmly welcomed, even the ones from
the mainland who are looking for a Travelex
office so they can exchange their U.S. dollars
for the local currency. BC
About the Author
stu;lehr,;CrCM, is an industry
principal (AKA or “Big Kahuna”) for
Finacle, Infosys Technologies Limited.
(Finacle is a core banking system and Stu
is responsible for advising on regulatory
requirements. He won’t be writing any
code—as if he could). He is currently based
in Los Angeles, Calif., but unfortunately
nowhere near Malibu. For the 20-some
years prior to this he developed and led
compliance programs for a number of
kind-of-big banks and an online payments
provider. Since 1993 Stu can’t seem to end
his dependence on ABA activities, from
the Compliance Executive Committee
to Conference Planning to serving on
the faculty for the ABA Compliance
Schools. Even after receiving 2002’s ABA
Distinguished Service Award, he won’t go
away. He did manage to get a couple of
degrees, from Nebraska Wesleyan University
and the University of Nebraska College
of Law, and prior to discovering the thrill
that is regulatory compliance, he tried his
hand at a number of things, from practicing
law to corporate marketing. Contact him at
stu.lehr@gmail.com.
