4. Organizations that wish to remain independent; 5. Organizations that wish to plan ahead for a future sale or liquidity event. WHAT SHOULD STRATEGIC OWNERSHIP PLANNING INCLUDE? Th e strategic ownership planning process would include, but not be limited to, the following: 1. An analysis of the ownership as it is today; 2. An identifi cation of what the future ownership will look like; 3. An analysis of alternatives available to accomplish the desired ownership; 4. Selection of the best alternatives to accomplish the de-sired ownership; 5. Implementation of timeframes with accountability for the alternatives selected; 6. Ongoing review and evaluation in order to achieve the desired ownership structure. We are not trying to push any particular alternatives, but we do believe that for banks to survive and thrive they must have a plan and execute on that plan. Failure to properly plan can be very expensive and result in unintended consequences. We are fi rm believers in the community bank system because of its impact on the economy and the benefi ts that community banks bring to their local markets. Th e next few years in bank-ing will continue to be challenging for the industry as a whole, but it will create great opportunities for strong, well-capitalized organizations. No matter where you are in the spectrum you must have a plan to move forward and devote the time, energy and thought to execution of that plan. For more information contact Bob Wray, 816-627-4139; Dean Johnson, 816-627-4140; or George Th ompson, 816-627-4141; or visit www.thecapitalcorporation.com. LESSONS LEARNED FROM CFPB/DOJ FAIR-LENDING ACTION BY CRAIG NAZZARO O n June 29, the Consumer Financial Protection Bureau and the Department of Justice demonstrated their continued emphasis on fair lending with the announcement of a joint action against BancorpSouth for discriminatory mortgage lending practices. Th e parties’ consent order, pending court ap-proval, would require BancorpSouth to pay $10.6 million. Indus-try participants should note three key aspects of this enforcement action: (1) the eff ect of BancorpSouth’s response to the investiga-tion on the settlement; (2) the CFPB’s use of “testers;” and (3) the CFPB’s continued focus on fair-lending issues. Th e consent order explains that during the investigation BancorpSouth, headquartered in Tupelo, Miss., improved its compliance management system, reduced its fair-lending risk and increased its lending in minority areas prior to entering into the consent order. Th ese steps included: • Implementing rate sheets to price loans originated by its community banking department. • Transitioning to centralized underwriting in its commu-nity banking department. • Appointing a chief fair-lending offi cer with responsibility over the bank’s fair-lending compliance program. • Appointing a community development lending manager with responsibility over meeting the needs of homebuyers in low-to-moderate income and minority communities and hiring 16 community-development mortgage specialists. • Opening a full-service branch in a majority-minority neighborhood in the Memphis area. • Providing fi nancial literacy training in the Memphis area. • Implementing enhanced fair lending training. • Introducing a low down-payment credit product. • Monitoring pricing and underwriting outcomes on a quarterly basis. • Hiring a new CEO, president, general counsel, mortgage department president and chief banking offi cer and direc-tor of community lending. Th e CFPB’s Bulletin 2013-06 titled “Responsible Business Conduct: Self-Policing, Self-Reporting, Remediation and Cooperation” states: “the bureau principally considers four cate-gories of conduct when evaluating whether some form of credit is warranted in an enforcement investigation — self-policing, self-reporting, remediation and cooperation.” Some banks and other entities take the wrong approach dur-ing an investigation and believe that any changes made to their policies or procedures may indicate that they were guilty of the allegations alleged in the investigation. In fact, as evidenced here, the opposite is true. Th e CFPB guidance explicitly states that the bureau gives favorable consideration to banks that “improve internal controls and procedures designed to prevent and detect a recurrence of such violations” and change “business practices, policies and procedures … to remove harmful incen-tives and encourage proper compliance.” A comparison of this action with the last CFPB/DOJ enforce-ment action involving similar allegations, CFPB and USA v. Hudson City Savings Bank, F.S.B., is telling. In the Hudson City action, there was no mention of what steps Hudson City took to improve its compliance management system prior to settlement. Instead, the consent order stated that Hudson City simply as-serted that it had “treated all of its customers fairly and without regard to impermissible factors such as race and national origin.” Th e CFPB described that settlement as “the largest redlining settlement in history, as measured by direct subsidies.” Hudson City agreed to provide over $27 million in mortgage subsidies and outreach programs and pay a $5.5 million penalty. Although Hudson City, when viewed by assets ($45 billion), is a larger institution than BancorpSouth ($14 billion), it is not unreasonable to attribute BancorpSouth’s ability to negotiate a settlement far below the value of Hudson City’s settlement to BancorpSouth’s remediation actions during the investigation.