GeoDataVision
Regulatory Compliance Newsletter
 
This is the first of our newsletters intended to help you with regulatory compliance. We plan on issuing these advisories periodically.
The Most Embarassing Reporting Mistake under CRA
    Right now many banks are preparing and scrubbing their data for submission under HMDA and CRA by the end of February. Anyone associated with these regulations knows there are plenty of kinds of mistakes that can be made. However, one of the most embarassing mistakes is to classify your loans as not reportable under CRA and have your chief financial officer classify the same loan as a small business loan in The Call Report or Thrift Financial Report. Anyone can have a disagreement with an examiner about technical interpretation of a loan classification, but it is really embarassing and a no-win situation when you and your chief financial officer treat the same loan inconsistently—one of you has to be wrong! Therefore, we suggest as standard operating procedure (SOP) someone should review and compare all loans as they are classified in TCR or TFR and as they are classified for reporting (or not reporting) under CRA. While this does not prevent you and your chief financial officer from making a mistake, it does prevent you from the embarassing situation of contradicting one another.
Other Common Reporting Mistakes

    Aside from discrepancies between the Call Report and the TFR and your CRA loan register, other mistakes commonly made during data preparation are:

• Leaving fields blank
• Using "N/A" rather than "NA"
• not completing the new rate spread field properly (2 characters to the right and left of the decimal point must be completed, (e.g., "3.25%" rather than "03.25%")
 
You should catch many of these errors as you run edit checks, but why not limit the numbers of corrections by keeping these common types of errors to a minimum? Alert your data entry people to these types of errors with a written memo advising them of these common mistakes. "An ounce of prevention is worth a pound of cure".
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