The Fairness Frontline: Insights in Fair & Responsible Banking

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You are listening to Leaders in lending
from Upstart, a podcast dedicated to helping

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consumer lenders grow their programs and improve
their product offerings. Each week, here

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decision makers in the finance industry offer
insights into the future of the lending industry,

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best practices around digital transformation, and
more. Let's get into the show.

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Hi, this is Lynn and I
am here with Nick and Lindsay who

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are the chair and Vice chair of
the Fair and Responsible Banking Committee, and

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we are here joining you from CBA
Lives. Lindsay, Nick, would you

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like to introduce yourselves tell our listeners
a little bit about you. Sure.

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I'm Nick Rayessler. I'm the Fair
and Responsible Banking Officer at US Bank,

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senior vice president there as well,
and I chair the Far and Sponsible Banking

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Committee based in Minneapolis and been doing
fair lending and you to app and compliance

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for decades now. By I'm Lindsay
Yusuf. I'm an executive compliance director and

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ally financial and I'm also the Fear
of Responsibil Banking Officer and the vice chair

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of the CBA Fear Responsibil Banking Committee
working with Neck and I think I'd been

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in the industry over twenty some years, most of the time focusing on FAAR

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lending INDI gap as well. Great
well, thanks again for joining us here

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on the podcast. So, Nick, would you tell us a little bit

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about what the Fair and Responsible Banking
Committee does, like who are your members

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and kind of what tribmission sure.
Yeah, So, the Fair Responsible Banking

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Committee is one of many committees that
the Consumer Bankers Association has assembled and put

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together over the years, and it's
made up of fifty four banks currently and

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so we meet monthly and the focus
really is about promoting education and the exchange

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of information ideas about fair lending,
UDAPP and at times sort of overlapping compliance

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requirements. So it's really about sort
of bringing a bunch of banks together that

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are all working on similar risk topics
and discussing kind of what's going on.

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And I think in many cases,
you know, that's conversation and dialogue is

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helpful in especially in areas where there's
not prescriptive guidance, and so it's up

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to the industry to kind of formulate
best practices and things like that. Sure,

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And there's certainly a lot of a
lot of things going on in the

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industry right now as specifically as it
relates to to fairness in banking and in

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lending. So lindsay, when you
think about kind of the committee and you're

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you know, fifty four partner banks
who are members of it, how does

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the committee really influence those external partners
maybe vendors that they work with, to

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have the same sense of importance of
fair and responsible banking principles And how do

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you see that kind of impacting then
the industry that partners with banks, great

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question. So CBE really gives us
a platform where we're able to work closely

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with vendors as well as outsider groups, consultants, attorneys, and especially each

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other to learn best practices. So
we really break to the table what we

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see within our institutions, our experiences, and our many years of learning how

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to implement programs and services to determine
what are some of the best practices that

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we do as a whole. And
what we find is we have the opportunity

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to really speak with again vendor groups
and let them cure voices as to challenges

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that we have when we're implementing new
regulations or if a program isn't working well,

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what we needed to do to work
better for US. So, for

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instance, we have the new ten
seventy one or the Small Business Lending Rule,

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which is going to require for many
institutions to collect data and then submitted

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on their lar for small business similar
to home DAB or CRA. So now

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we know it will be of vendors
that are creating these programs for us,

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so that we have the latform to
create or collect that data, create our

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war and then submit it to the
government on an annual basis. And so

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what we're doing working together is we
can find what are some of the challenges,

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what are some of the things that
we need to do, How can

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you make this more simple? And
making sure that that is part of what's

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going on with our third parties.
But it's also looking at outside is consultants

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as well. What are the consultants
bringing. Are they hearing our challenges,

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some of our concerns with what we're
dealing with on a day to day basis,

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and how can they help us to
be more effective and efficient in the

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work that we do. Sure,
and do you have any consultants on the

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committee as well? Or are all
the committee members bank partners today? All

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banks? That's why that is what
I thought, So I think Nick,

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you mentioned something it was interesting that
the guidance isn't always prescriptive, maybe very

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broad, and then you have to
work with with either external partners or consultants

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too to figure out how to implement
that and make sure you're kind of staying

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within the bounds. So how does
the Committee think about kind of advocating with

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the regulators or advocating in Washington or
really just CBA in general to drive towards

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a little bit more kind of clarity
or prescriptive application of the regulations. Yeah,

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and that's a great point in terms
of the Committee being a bit of

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a feeder for the CBA's advocacy efforts
because they're taking sort of the industry brain

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trust of fair responsible banking and what's
important to the group on issues that are

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arising. Maybe there's a request for
information from a regulator, Well then CBA

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is wanting to know, well,
what what should we put in there?

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If it's a it's you know,
fair lending related or maybe there's a new

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rule I mean talked about ten seventy
one, and so advocating for you know,

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hey, there's elements here that maybe
aren't appreciated, are really like sort

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of considered in the rule and we
want to bring that perspective and so so

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that's I think through our discussions of
you know, changing regulations or new expectations

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in the challenges that we have or
questions that we have, we can bring

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those perspectives. And then whether it
be a one off question directly you know,

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facilitated through the CBA, or the
CBA bringing in regulators as they have

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to our committee in the past,
I think those are all ways that we

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can have this kind of dialogue.
And you know, it brings a greater

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perspective than just any one of our
single banks interacting because we all have you

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know, government relations, folks,
and we all interact in some way,

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shape or form with our regulators too. So I think that's that's part of

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the value that I think the CBA
in the committee brings absolutely and they really

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take all of our concerns and prove
it as a whole. That really drives

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the industry and what we're doing from
a fair and responsible banking standpoint. And

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it's great because the CBA really is
the voice on the hell for us instead

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of individual voices, it's the communal
voice of fair and responsible banking. Sure

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and I think that's that's definitely well
reflected here at CBA Live, where you've

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got a number of Bay partners,
you've got vendors like us, and then

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you've also got a couple of the
regulators here both presenting and attending the sessions,

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which is great. So then I
think, lindsay, when you when

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you think about so we're working with
the regulators, working in the committee,

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working across partners, like how does
the committee then kind of disseminate that out

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to the membership, Like how are
you sharing kind of monitoring techniques and best

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practices related to fair banking. We're
always looking on what's coming out of our

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regulatory bodies, what are the trends, what are the risks that they're identifying

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in other organizations, and making sure
that when we're meeting, we're talking about

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that so that we know, hey, this bank has a consent order,

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what do we need to look for
internally or what best practices have you put

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in place to help address some of
these risks? Sure, and I definitely

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think, you know, just even
looking at Q one, I think the

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number of consent orders has been relatively
high across the across the industry. So

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I think, you know, Nick, just can you maybe just kind of

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expand on that, like how the
committee is looking at those emerging issues or

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things and new topics that are coming
out of whether it's consent orders or even

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just kind of advisory opinions that come
out as it relates to fair banking,

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Like, how do you kind of
stay on top of just the kind of

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velocity and volume of what's out there
right now. Yeah, that's a great

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question because I think all again,
individually, our respective banks and programs monitor

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for emerging risk. We're looking for
guidance or consent orders and things like that

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that we can learn from and figure
out how to implement and sort of our

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own best practices within our institutions.
But what's nice is when you bring together

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the multiple banks and CBA. So
often what happens is CBA staff will say,

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Hey, here's sort of a DC
update. Here's what's happened. There's

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been this proposed rule, there's been
this file root issue, there's been this

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whatever. So that like almost forces
us to you know, focus in on

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those things. But it's not just
a Okay, I'm going to wait until

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the committee to hear about this or
something. It's it's the perspective like,

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hey, you know, how did
you read this? Or you know,

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I don't know if I'm reading into
this too much, but what did this

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sentence perhaps mean? And so it's
those kind of conversations that I think are

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interesting and helpful and and yeah,
so it's it's kind of as well as

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I think the CBA. Again,
it's kind of a two way street of

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going all right, there might be
some news article that one of our members

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saw no one else did, and
it's just you know, could have been

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something specific to their bank and it
hit their kind of media tracking. And

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so those things are are invaluable as
well to sort of go, okay,

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well that that might not have been
on my radar, So to sort of

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use the strength of many to have
this more cohesive and but yet still like

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fair and responsible banking focused to view. And that's the lens of everyone on

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the committee really, I mean somewhere
more more or less hats. But it's

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one thing to say, oh,
you know, this news article came out

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and the just be like a reputation
impact, right, Well, then okay,

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that's fine's headline risk, but doesn't
mean anything for your program. So

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it's those things that's like, Okay, this isn't a conclusion yet, but

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is it something to be worried about
in the future. Yeah. Actually,

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and it seems like the last what
two three years with our current administration,

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it is non stop throwing all kinds
of information at us, and sometimes it's

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repeated, sometimes it is against previous
guidance, and so we're trying to figure

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out is this important to us now
and what do we do with it?

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And I definitely think that it is
kind of an interesting point you made,

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Nick, that that there may be
something that comes out that seems related but

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is unrelated. I think we certainly
see that being on THEI side of the

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world that uh, the industry tends
to get kind of painted with a pretty

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brong brush that you know, is
uh. I think we find are fond

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of saying and trying to like we
we may not live in the same house

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as some of those other partners,
but we're certainly on the same street,

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and so we're we're feeling some of
that reputationally where you have to worry about

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those things that may not really directly
directly impact you. So I think the

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idea of fair and responsible banking certainly
is is new, but I do think

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that it's really I think expanded more
asset classes and traditionally thought mortgages a lot

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and lending and traditional banking, but
now with a kind of variety of vendors

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out there and different products, that
the stature of fair and responsible banking has

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really become much more important and visible
within many banks. So I think lindsay,

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like, how do you think about
like working with your member banks,

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and so one of the best parts
of being part of CBA is that you're

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really working with the best in the
industry when it comes to fair and responsible

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banking. We worked at all different
sized institutions and we have different experiences,

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but we're also able. We've become
friends outside of just a committee, so

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we've worked at each other's institutions before
some of us had worked together on the

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same team, and in the future
we may again. And so you know,

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there's often times where we're calling each
other or communicating outside of the committee

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because we can't always wait them until
they're exollutely leading to talk. And if

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there's a consent order that comes out
or something that's a concerned or I'm in

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the middle of an examination and I'm
being asked these questions and anytime you can

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call or contact anyone else in our
committee Gkirk and they're always available to talk

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to you. And it really is
helpful because being in fair and responsible banking,

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it's it's not an easy position all
the time. We have the honor

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and privilege to working in this position, and I always tell my team we

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are honored to have this role.
However, we have a lot of regulatory

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expectations and we have to make sure
we're doing the right thing by our bank

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and our customers, and so it
really can be a difficult position at times,

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so we lean on each other for
information guidance, you know, sometimes

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is just an encouraging word. But
I also find that I like to benchmark

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my program at least annual, so
I can contact anyone with the committee ask

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them what are they doing within their
programs, so I can look to see

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if there's any gaps in my program. And the gentleman to my writing,

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I am called them many times over
the years to say, hey, you're

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now my pure bank. What kind
of things are you putting in place that

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I could consider it with in mind? So it really gives us that strength

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again in numbers because I know I
have that ability to talk to someone at

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any time that could help me with
whatever situation I'm going through. And on

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top of that, we also have
a CBA of course, so we always

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have the ability to reach out to
anyone at CBA anytime, get feedback,

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get assistance, and it really is
a great platform and kind of it's a

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friendship groove, like we're all friends
now we're cheer at each other on no

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now back to the show. Do you

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think the banking industry is very large
but is very small in certain pockets and

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everyone seems to know each other.
I definitely liked your point about not being

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really want to be out on an
island. If you're doing something really novel

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in the area of fair and responsible
banking, maybe that's not a great risk

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to take good and you get,
you know, and we talk a lot

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about that at Upstart. I deal
with a lot of our bank and credit

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union partners and we innovate in a
lot of areas and compliances area that we

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want to be part of the pack, not necessarily innovating exceptionally there. So

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I think that you know, as
you think about, you know, working

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with the members across the CBA and
within the committee, can you share some

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maybe examples of some of those best
practices. So maybe like specific more tactical

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things that the committees promoting to their
members, as like the fair and responsible

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banking continues to throw kind of evolve
and challenge the industry. Yeah, there's

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there's definitely a lot of different dimensions
where again there's not a lot of prescriptive

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guidance or exactly like your program should
have this, this and this. Okay,

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maybe maybe the big blocks are there, but what it actually means there's

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a lot of wiggle room on what
you decide to implement at any particular institution,

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and rightfully so, size and complexity
bank all that suck. But I

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would say, you know, one
thing that comes to mind is the area

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of redlining risk and so longstanding examination
expectations and exams, long history of settlements

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in the area. I think the
the general sort of risks and the types

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of things that are being analyzed have
been there's there's a consistent baseline, but

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then we're seeing an evolution of additional
type of investigatory requests and things like that

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that are that are happening or just
hearing from other consultants or other legal Council

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external external parties about working on cases
that are not public and some of the

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insights from there that then get fed
to the committee we discussed them. I

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think that's that's, you know,
an example to me where and even getting

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into like for example, just this
morning, we're talking about redlining and got

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kind of deep into some of the
quantitative aspects of how do you define what

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you're your group is how do you
and then what sort of analysis should you

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kind of start at a broad brush
level or dive right into specific products?

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So those types of things that you
know, you really won't find a lot

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of sort of a guidebook, so
to speak, or a you must approach

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it this way. And so that's
where you know, the dialogue of like

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okay, well, yeah, well
where do you get this data from?

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Or you know work you know?
Okay, well for redlining, it starts

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with humda data. Well, maybe
not everyone has done an analysis of a

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particular product. Now we have small
business lending gaining prominence, I guess eventually

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even more so with ten seventy one. So then it's like, okay,

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maybe some member banks have done some
fair lending analysis in the past and and

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others have been kind of waiting for
ten seventy one. So it's sort of

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like there's a how to approach a
risk management lens of fair lending as well

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as some of the pract to collect
Well, how do I know where to

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go for this data? You know
what sources are there? You know,

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and not really divulging anything confidential or
anything like that. You know, within

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our institutions that we can't share.
I mean, we're very mindful of that,

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but I think just having those those
conversations to Lindsay's earlier point, it's

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like, if you don't, you're
just sort of saying, well, I'm

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a smart person. I guess I'll
make the decision based on this, and

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it could be right, but having
that additional context could lead you down a

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different path and different opportunity. Sure, that actually kind of raised another question

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for me, is that you're thinking
about like the I think the fair lending

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testing, fair banking testing, there's
always been utive quantitative for getting more quantitative,

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acquiring different levels of kind of expertise
and skills. How do you think

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about hiring for that, Like is
it hard to find people who really have

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that expertise? And then and this
is a little bit of a question for

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both of you, both higher huring
kind of on the bank side. And

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then you know, are you seeing
some challenges particularly of banks that maybe don't

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have as much, aren't as large, and don't have the resources to really

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hire that expertise, And if you
have any advice on how they could support

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that without really being able to then
maybe hire a large team internally. That's

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a great question. We were giving
this discussion yesterday during our committee. You

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know, I said, I feel
like a dinosaur and the fair lending industry

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because we kind of started it when
it really came out fifteen twenty years or

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sure, and so we're always looking
for the next generation that it's going to

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come on and be those fair lenning
officers and fair responsible and banking officers.

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It is very difficult nowadays for just
complyance to general to be hiring new persons

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that really are excited about it and
want to do it. It seems like

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they're kind of staring away. But
I think from a fair responsible banking perspective,

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we're really focusing a lot more on
AI and models, and so that

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might help to drive bringing in new
people who really want to look at model

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validation, how to build models,
and really on the technical side. And

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so I think there's opportunities there.
It's just making sure that it's an attractive

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part to them sharing that they understand
again with that data, what are the

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results? What are we achieving here? For a reson's a little banky.

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What is our goal, which is
to do the right thing by our customers,

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to bring new products and services and
make it an even fair ground for

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all customers to have access to your
products and services. So I think it

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really is that it is a difficult
right in hew, It really is because

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on the other side, you need
people that really understand the regulations so that

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they can understand where there's true fair
learning risk. I find oftentimes people want

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to join compliance by starting and fair
lending, and I always say, this

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is not really the easiest play share
to start. You kind of go there

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midway or ending your career when you
understand the basics that we your compliance programming.

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So ideas on hiring is related.
There is a talent committee that's a

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broad yeah at CBA. But yeah, now, yeah, no, it

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is is a difficult one. I
think one thing that is a selling point

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is the mission of a responsible banking
right. This is not a checkbox exercise,

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you know, and not to diminish
any other compliance requirements, but it

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has a very emotional and sort of
struggling for the word, but you know,

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it's very meaningful and I think can
impact people in a deeper way than

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perhaps other risk disciplines. You know, maybe you're you're super skilled quantitative analysis

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a person and you could be used
in a credit risk capacity. It's like,

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Okay, that's cool, we're you
know, we're evaluating credit risk.

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I mean that has that more exciting
than you know, defending against illegal discrimination.

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I don't know. Personally, I
think the discrimination pieces a little a

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little bit more meaningful at times.
But so so I think that's a selling

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point, but it really is a
struggle. You know. On the flip

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side, there's a lot of exciting
things happening with machine learning AI, and

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so if I'm you know, a
very experienced and educated quantitative analysis person,

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you know, there might be this
allure of like, ooh, you know,

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the shiny objects and like something that's
really kind of cutting edge. Well,

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you know, you're not really going
to be doing cutting edge work in

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a compliance shop, like I mean, I'll just say, I mean maybe

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not entirely, right, So so
I think so I think that's what makes

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it difficult at times. But I
do think there are some individuals that really,

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you know, are looking for change
and it might just be a short

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term kind of Hey, I want
to be more well rounded and use my

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quantitative skills for something different. And
so that's where I think sometimes we luck

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out and get you know, folks
that have some experienperience, but yeah,

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by and large, I mean there's
very well tenured positions and then they have

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built that knowledge over the course of
ten plus years. So it is it

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is a risk. And one thing
that I'm noticing is so my background is

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I started in compliance with the Federal
Reserve Bank of Minneapolis. The question wasn't

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really about examiners, is more about
you know, analysts. But I'm seeing

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that sort of the examiner route is
less taken in the compliance realm. I'm

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seeing more people sort of graduate or
maybe they have a lot of degree they'll

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jump right into banking. And I
don't know why that is, but I

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think it seems like dating myself a
bit. But like twenty years ago,

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as a baby examiner, I was
there like okay, at some banking experience,

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just graduated from college. I'm learning
about compliance right out of the chute

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to kind of straight up from college. And I was there with others and

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I can, you know, I
work with some folks that US Bank,

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for example, that I've worked with
at the FED you know. So it's

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like this progression and I think it's
invaluable sort of to Lindsay's point, I

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mean having that well rounded knowledge of
compliance and perspective. I guess I'm not

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one observation about talent pool is like
it doesn't seem like there's that experience level

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of like, Okay, you've been
an examiner for five years and now you're

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looking to join a bank, right. But that's a good point though.

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We do draw on audit teams a
lot of times a little over a compliance

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or compliance when we moved to Honish, and so I think that's a good

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way to get the experience and examiners
as well. So I have a couple

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forwer examiners on my team and then
really bring great insight because they know the

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behind the scenes of what examiners are
looking for during your examination and kind of

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the trends are kind of great reports
how to create your analysis a little bit

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differently than what you're used to doing. So it really is such a great

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way to bring people from different parts
of the industry. But makes that I

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think if you if you have a
passion to help people and to make a

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difference with what your organization is doing, fair responsible banking is really the place

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to do that because you are you
have to be passionate, You need to

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feel good every day that you're doing
the right thing for other people, you're

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advocating for them, and you're really
protecting other customers, and so it really

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that's why I always say it's a
privilege and an honor to work in fair

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responsible banking. I think that's kind
of a great end for the comment.

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And you know, privilege and honor
to work in in fair and responsible banking

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is a great way to uh uh
to close things out today, So appreciate

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Nick and Lindsey, both of you
being here. I'll start partners with banks

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