17 minute read
Member Spotlight
CANDACE FRANKS Bank Commissioner
Candace Franks was born and raised in Jonesboro, Arkansas. Her father was an ophthalmologist and her mother was a homemaker. She had the “average town kid type of childhood” and had a passion for history.
That passion led her to pursue a degree in history, then a master’s degree in American History. Candace then went on to get her law degree. Once out of law school, Candace started working at the Arkansas Attorney General’s office, but knew there was something better suited for her elsewhere. Everything changed for her when her friend called about a job opening at the bank department for an attorney.
“I didn’t know what the bank department was or what they did. I had no experience with that at all. That’s how I ended up at the state bank department. That was in 1980. It’s been an incredible experience,” says Franks.
At first, Candace wasn’t sure that this was the role for her. She didn’t know the industry, but time flew by and after a few years she developed an enthusiasm for the industry and wanted to stay. She says it is that enthusiasm that has kept her in her position.
She has served the financial regulatory body for nearly 40 years, first as general counsel from 1980-1995 to the bank department then she was appointed to Deputy Commissioner and General Counsel until 2007. Then, she was appointed as the 21st Commissioner of the Arkansas State Bank Department. Not only is she the longest appointed commissioner, she is also the first female and first professional bank regulator appointed to her position.
“I’ve had great opportunities. I’ve worked for six bank commissioners and five governors, and I have to say that all of them have been very different, but I just feel very fortunate because all of them have been very professional and very special people to work for and work with. It’s been very fulfilling.”
During her time in this role, she has been through four banking crises. While they all affected her, the 2008 recession hit her harder. “I took it personally, it was hard for me to see bankers that I’d known for 30 years struggling.” Candace adds, “I think you have to decide that it’s not personal and you have to man up and go do what you need to. You’ve got to deal with it. You’ve just got to decide if that’s what you want to do and it’s your responsibility to do it.”
Candace isn’t all work though. She met her husband Roger during college. He was also earning a degree in social work. Roger has been at his current job for 38 years. While Candace says, “Nothing much changes about us, we’re pretty boring,” the two have worked as a team since the beginning.
They have one daughter, Ava, who was born in 1983. And six weeks after Ava was born, Candace jumped back into work during the legislative sessions.
“I couldn’t have done it all without Roger’s help. He gave me a lot of support at home. He was always very supportive and encouraging when I had training or travel,” Franks says.
She adds that a good support system allowed her to pursue her career and fulfill her duties. She knows that it is a struggle for women to find the work and home life balance.
Robert L. Robinson, IV Community President/Senior Credit Officer Simmons Bank
“How you work through your work and your home duties should become part of your everyday life. Both Roger and Ava were always interested in what I did. When we attended the bankers association events, or traveled to visit congressional delegations, and those kinds of opportunities, they both went with me a lot and enjoyed it. It was always just kind of part of what we did.”
Candace says she would like to have more females as bank examiners and the ones that are at the bank department do a really wonderful job. But often it can be hard when they have a family, especially young children. Examiners have to travel a lot and may be out for a week or two, which can be a challenge if you don’t have help from home or other family support.
She does see things shifting in the banking industry and says there are good opportunities for women in banking.
“There are a lot of women in the industry in lower level positions. I don’t really know why that has happened. I don’t know if it’s because women haven’t felt like they could get promoted so they haven’t worked for it or whether or not they just haven’t had the opportunity. I think that women need more chances to be able to be promoted and get into more executive positions of these institutions. I’d like to see more of that over the next years. It’s a great industry, so I would certainly encourage participation in it.”
(Left to right) Governor Asa Hutchinson, Deputy Secretary of State Dwight Southerland, and Candace Franks as she is sworn in as Bank Commissioner.
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The Consumer Financial Protection Bureau (CFPB) recently released its Summer 2019 Supervisory Highlights, which includes key findings from the CFPB’s exams for the most part between December 2018 to March 2019. In each edition, the Bureau chooses the areas where it has seen the most supervisory activity, and for this one, it highlighted auto loan origination, credit card account management, debt collection practices, FCRA information furnishing, and mortgage loan origination.
Auto Loan Origination In the auto loan origination space, the CFPB called out lenders who sell “GAP insurance” to consumers with low loan-to-value ratios because they likely would not benefit from the additional coverage. If the vehicle were stolen or damaged, the difference in the amount owed on the loan and the amount obtained from the insurance company is likely to be low. As such, the Bureau found that consumers showed “that they lacked an understanding of a material aspect of the product” by purchasing a product they would not benefit from, and that lenders had enough information to know this and sold the insurance to them anyway. This was considered an “abusive” practice because it took “unreasonable advantage” of this lack of understanding, and needless to say, a lot of GAP insurance was refunded.
Credit Card Account Management The first issue in this area was with so-called “triggering terms” found in Reg. Z, 12 CFR 1026.16(b). In some exams, institutions included triggering terms in their advertisements and simply failed to provide some or all of the required additional disclosures. In others, there were issues with the “one click away” rule. Not only were some disclosures multiple clicks away, but some were not properly labeled at all or were not conspicuous. I’ll note that these issues often come up in Compliance Alliance’s document reviews, so it would be worthwhile to do a double check of your credit card ads before they’re published.
This wasn’t the end of the credit card issues either. In general, 12 CFR 1026.12(d) prohibits credit card issuers from offsetting credit card debt with a consumer’s deposit account. However, there’s an exception for a security interest in a deposit account if the consumer affirmatively agrees in the account-opening disclosures. The hang up is that the security interest cannot be effectively the same as the right of offset, so an institution that just routinely includes a security interest provision in the cardholder agreement would generally not qualify for the exemption.
The Bureau highlighted that the consumer must be aware that granting a security interest is a condition for the credit card (or for more favorable terms on the account) and must specifically intend to grant a security interest in the account. Some indicators of the consumer awareness and intent mentioned were: (1) separate signature or initial lines on the agreement indicating that a security interest is being given; (2) placement of the security agreement on a separate page from any other disclosures; and (3) referencing a specific amount of deposited funds or a specific deposit account number.
Debt Collection Practices The Fair Debt Collection Practices Act (FDCPA) of course prohibits using any false, deceptive, or misleading representation or means in the process of collecting any debt. Specifically, Section 807(2)(A) of the FDCPA prohibits falsely representing the character, amount, or legal status of any debt. Examiners found that certain debt collectors claimed that interest was owned on debts when, in fact, it was not authorized by the underlying contracts between the debt collectors and the creditors. In doing so, the debt collectors falsely represented to consumers the amount due and ultimately had to provide remediation. As a side note, a “debt collector” for FDCPA purposes generally does not include a bank that collects its own debts in its own name, but we’ve talked to many Compliance Alliance members who follow the FDCPA rules as guidelines, even though they technically do not apply as a matter of law.
Mortgage Loan Origination The focus of this section was on the inaccurate disclosure of annual percentage rates and total annual loan costs in reverse mortgage transactions. While most of our members do not originate reverse mortgages, this is still a sobering reminder of how pervasive a failure to properly calculate the APR can be, and the very high cost of consumer restitution.
If you’re interested in reviewing the review in its entirety, you can access it at: https://files.consumerfinance.gov/f/documents/ cfpb_supervisory-highlights_issue-19_092019.pdf
About the Author
FCRA Information Furnishing The Fair Credit Reporting Act (FCRA) requires that when a bank that is acting as an information “furnisher” receives a notice of a dispute from a consumer reporting agency (CRA), that it complete its own investigation generally within 30 days. Not only did some institutions miss this deadline, but others failed to conduct an investigation or respond at all. In addition, if a furnisher determines that previously furnished information is not complete or accurate, the furnisher must promptly let the CRA know and provide any corrections or additional information to make the reporting complete and accurate. Some failed to provide these corrections or updates, while others did so, but subsequently continued reporting inaccurate information after the correction. Another issue cropped up with accounts that were paid-in-full or settled-in-full. Certain institutions had a practice of deleting the identification number when an account was paid in full, and this practice changed the search key that the furnishers used for matching when making account updates. As a result, the CFPB found that almost two thousand accounts were not updated to reflect the correct paid-in-full or settled-in-full status.
Finally, the Bureau found that when some institutions received consumer disputes, they continued furnishing information about the disputed accounts for several months without providing the CRA with notice that the information was disputed, in clear violation of the FCRA. In response to these findings, the CFPB required them to set up enhanced monitoring activities, as well as policies and procedures on compliance with furnisher-specific requirements of the FCRA, in addition to providing evidence of corrective actions.
Victoria E. Stephen Deputy General Counsel
Victoria E. Stephen, CRCM, serves as Associate General Counsel for Compliance Alliance and was recently appointed as the supervising attorney of Hotline. While receiving her Bachelor of Business Administration in Banking Finance from The University of Texas McCombs School of Business, Victoria worked in both deposit and lending services. She continued her interest in financial services at the University of Texas School of Law by focusing on secured transactions, taxation, contracts, and corporate governance.
Victoria has since worked in corporate tax law, mergers and acquisitions, and performed legal research on a range of regulatory issues. Since joining the Compliance Alliance team in 2015, Victoria has written many articles for a variety of publications, and spoken at a number of compliance schools and conferences. Victoria heads our team of hotline attorneys who assist members with the spectrum of regulatory compliance questions on a daily basis, and serves as Editor of Compliance Alliance’s monthly Access Magazine.
Max Harrell
Loan Officer Generations Bank, Rogers, AR
What can banks do to better appeal to millennials – in the workforce and as customers? Banks can appeal to millennials as customers by providing quick and easy service at the touch of a button or screen in most cases. Millennials are doing more, more efficiently and banks should take notice. Millennials pursuit is to make things as simple and easy as possible and this includes our banking. Banking is a service and we, as bankers, need to recognize that. We are constantly in competition not only with other banks but other service industries as well. The more efficient other services become the more banks need to follow this trend. Banks can appeal to millennials in the workforce by providing better work atmospheres. Most banks I see and know about have focused so much on the customer that the work atmosphere is lacking. Often times banks can be caught between a fast-food restaurant and a hospital lobby environment. When competing with other jobs in the market it can be challenging for banks to keep up. In NWA, banks are competing for high level employees with the likes of Wal-Mart, J.B. Hunt, Tyson, and Wal-Mart vendors and suppliers. This can be a difficult task for banks to compete in regards to pay, vacation time, ability to rise within the company, etc. I think banks offer incredible opportunities for highly-skilled workers, but we need to adjust our focus to accommodate the millennials in the workforce who have options galore.
What technology innovation has made the most impact on your life? The smartphone without a doubt has made the most impact on my life. There is not a lot that I do on a day-to-day basis that I can’t do on my smartphone. Emails? Live TV? Music? Podcasts? Banking? I can be in any place, at any time, and access all of these things within seconds. The smartphone can be a tremendous asset with the ability to access such a wide range of options so quickly. My smartphone is an integral part of my ability to interact with people, especially those that I may not see on a regular basis. It keeps me connected to a world that is moving at a breakneck speed. However, with all the positives that the smartphone provides there are some negative impacts as well. I have caught myself noticing that it becomes my default in times of silence or inactivity. Sometimes enjoying a moment of silence or actually watching a moment take place without recording can be just as refreshing as the instant access my smartphone can provide.
What civic project has your bank participated in that touched you the most? My bank has been a participating partner with the Clover Community School in Bentonville. The Clover Community School provides hands on, project based education for students who desire to learn in an engaging environment. Each year we provide a Banking 101 class that is taught by our employees on their school grounds. We have a wonderful relationship with the owners of the school and students alike. The school was started by a mother whose child has autism and was looking for a learning environment that gave him life skills and useful knowledge at a pace and place that suited him best. The thing that has touched me the most about the Clover Community School is that a mom with a child who has autism decided to not only have an impact on her son’s life but an impact on so many others, me included.
TALKING POLITICS Avoiding a Toxic Work Environment
by Stuart Jackson
Over the last several years (and perhaps even decades), political discourse has really headed south, and this is increasingly causing problems in the workplace – from co-workers not wanting to work with each other to loud and disruptive arguments to even fistfights. According to a 2018 Randstad US study, 49% of employees in the United States enjoy discussing politics with other employees, but 55% of those same employees have witnessed “heated political discussions or arguments at work” leading to stress, anxiety and an overall negative impact on productivity.
An initial reaction many private employers have is to simply ban “political” discussions at work. However, some political discussions among private company employees may be protected by the National Labor Relations Act. Even in a non-union setting, the NLRA “protects the rights of employees to engage in ‘concerted activity’, which is when two or more employees take action for their mutual aid or protection regarding terms and conditions of employment” according to the National Labor Relations Board’s website. Some employee discussions that have a significant political aspect may also address the terms and conditions of the workplace. Examples for Arkansans could include discussions about raising the state’s minimum wage, protections for LGBTQ employees, or the impact of medical marijuana.
New guidance issued by the NLRB in mid-2018 attempted to balance the rights of employees to exercise their rights with the rights of employers to maintain discipline and productivity in the workplace. Rules that are generally lawful include rules that prohibit “behavior that is rude, condescending or otherwise socially unacceptable”; “disparaging or offensive behavior”; and behavior that creates “discord with clients or fellow employees.” However, employers still must be careful not to apply these rules to discipline employees for conduct that would be considered concerted activity.
So what steps can private employers take to minimize toxic political discussions at work without running afoul of the NLRA? Here are a few ideas:
1. Do you have policies on being professional and collegial? Do not allow “heated” discussions or yelling of any kind, and expect mutual respect among all employees. This rule on expected behavior also carries over to employee interactions online.
2. Do you have a policy on violence in the workplace? Heated discussions and even fights have broken out in some situations. 3. Your workplace is not where one employee should try to change the political views of others. Prohibit political ads or stickers, or outright political campaigning, during work hours. This can include prohibiting solicitation of campaign donations or the distribution of campaign materials during work hours. Be careful though – it is important to have a non-solicitation policy that is uniformly enforced.
4. Managers and supervisors should stay well above the fray — they have to be the adults in the room and set an example of professionalism. Taking sides in a political argument does not help.
5. Do not allow an employee’s legitimate political views to impact his or her pay or performance reviews from a management perspective (although how he or she expresses those views could have an impact).
6. Finally, have clear and well-publicized anti-harassment policies. Some topics — like immigration or even terrorism — can easily morph into a potential harassment claim. For example, in the course of a conversation, one employee might say to another, “All Arabs are terrorists,” which would certainly be offensive to many employees and could lead to potential national origin, race or religious discrimination claims.
One hopes that people are waking up to just how toxic political discourse has become and can simply agree to disagree. But until the pendulum swings back a bit, employers can and should take steps to ensure politics do not impact the jobs their employees have been hired to do. Get your policies in place and talk to your employees about them before we get deep into the 2020 election cycle.
Stuart Jackson, a partner on the Labor & Employment Team at Wright, Lindsey & Jennings LLP, has been practicing in the employment law field for over twenty-seven years. You can contact him at sjackson@wlj.com, and you can follow the Labor & Employment Team on Twitter @ WLJEmployment.
