Avoiding The FCA & FIRREA Trap: Practical Tips For Compliance Professionals


As the government becomes increasingly aggressive in its efforts to fight financial fraud, companies naturally are looking for new ways to avoid becoming the next target. In the last two years, the Department of Justice (‘‘DOJ’’) has filed lawsuits seeking billions of dollars in damages from financial institutions, premised in large part on claims of recklessness and noncompliance. And DOJ is not alone. Other federal agencies, including the Department of Housing and Urban Development (‘‘HUD’’) and the Federal Housing Finance Agency (‘‘FHFA’’), also are focused on areas fraught with technical and contractual pitfalls, including loan origination defects, servicing missteps, consumer complaint management, and Home Affordable Modification Program (‘‘HAMP’’) compliance.

Traditionally, managing legal risk has been a task that falls squarely within the walls of the general counsel’s office. But as the current enforcement environment evolves, institutions increasingly are looking to their compliance departments to anticipate risk at both line-of-business and enterprise-wide levels. Given the challenges institutions face, incorporating compliance professionals into this new wave of risk management may in fact be a natural and efficient first step to proactively identifying and managing the types of risk on which the government’s recent efforts are centered.

Originally Published In BNA's Banking Report - August 27, 2013.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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