The Hawaladar

CHAPTER FOUR-1

CHAPTER FOUR

“LADIES AND gentlemen, if I could have everyone’s attention, please. It’s 7:00 a.m. on the dot. So, let’s get this meeting started.” Scott Kruse, President and CEO of Global United Bank of Chicago, was an early riser who had a penchant for break-of-dawn staff meetings, and he insisted on promptness at any he called. It was he who had suggested such an early hour to Paul Trotter, Senior Examiner-in-Charge of the OCC’s currently ongoing Safety and Soundness examination of Global United, as the start time for a first conference between the bank’s management group and Trotter’s team of examiners to discuss progress and initial findings of the OCC’s review. A few of the participants from both sides of the table had complained a little about the timing of the meeting since many lived out in the Chicago suburbs, and that meant a short night for some if they were to arrive at the appointed hour. Yet, no one had indicated they couldn’t make it. Sessions between examiners and bank management were something you didn’t miss if at all possible.

Scott Kruse, like Logan Hart, was also a relatively new arrival at Global United, having assumed his position as President and CEO at that institution only eighteen months before he and the bank’s board had approached Logan about joining the bank. Like Logan, Kruse was also a career banker with over thirty years of experience in the business, half of those years spent as CEO of three successive commercial banks in Minnesota and Wisconsin. Tall, rather professorial looking, and always impeccably dressed in Armani suits accented with signature bow ties, Kruse’s bearing suggested a vaulted self-opinion. Rumored to be a bit of a ladies’ man, a great deal of Kruse’s time was spent burnishing his image and cultivating relationships with major shareholders, directors and key customers of the bank—with an obvious preference for those who were female and attractive. So far, the jury was out in Logan’s mind as to whether he and Scott Kruse would ultimately make much of a team in the future. Scott was perhaps somewhat more politically oriented and hands-off in his management style than Logan usually felt comfortable with, but it was a little early yet to form any real firm opinion about him.

Scott liked to call himself a “visionary,” openly claiming his best talent to be an ability to surround himself with many good people who could carry through on the myriad ideas he was always coming up with. Logan had worked with people like Scott before, and more often than not, such doublespeak masked a proclivity for letting unfortunate subordinates pay the price when the so-called visionary’s ideas went south. Logan hoped it would not be that way with Scott.

As part of his due diligence on Global United prior to joining the organization, Logan had learned that Scott Kruse had taken the position of CEO at the bank after having parted with his previous employer under somewhat unpleasant circumstances. It seemed Kruse had helped a number of investors in a Minneapolis suburb successfully establish a bank under a new charter, only to lose the position of CEO after completing that task, having developed major differences with the bank’s board of directors as to what the long-term strategic direction of the bank should be. Word was that when Kruse resigned, the bank’s board had also differed with him regarding the applicability of a cushy severance agreement he had negotiated with them prior to joining their team. A nasty suit was still pending.

“I don’t believe that all of us here this morning have had the chance to become acquainted with each other yet. So, let us begin the meeting by going around the table and introducing ourselves to ensure that everyone is well aware of who is responsible for what within our separate organizations. The meeting will perhaps run a little smoother that way. We’ll start with the bank team on my left first, and then you can make the introductions for your group, Paul. For those of you with the OCC whom I haven’t had the opportunity of meeting, I’m Scott Kruse, President and CEO for Global United. Logan…”

With Kruse motioning to his left, introductions proceeded around the conference table beginning with Logan. Among members of management present was Rosemary Shindler, the rather stern-looking, petite, fifty-something head of Retail Banking who, Logan had noticed, typically preferred talking more about her golf game than banking. As the first female president of a small suburban golf country club—where the bank perennially picked up her membership—it was seldom she didn’t find a way to mention that fact to all with whom she came in contact.

Following her on the trip around the table was Leland Tucker, the buttoned down, balding, little Pillsbury Doughboy-type Senior Vice President in charge of Trust and Wealth Management, who usually slept through half the meetings he attended, particularly when they were as early as this one. To his left, whispering to each other in the Middle Eastern language of Farsi were Saud “Sammy” al-Dajani, the very confident, smooth-talking, Senior Vice President of Bank Operations, and Mairaj “Raj” Haifa, Senior Vice President of the bank’s new International Banking department. Both Sammy and Raj were rumored to be young protégés of the bank’s Chairman and principal shareholder, Tariq Nasir, who had been quite instrumental in recruiting them from competing banking institutions. Logan had taken an early liking to Raj, who was always quite pleasant, and ex-military. The jury was, however, still out a bit on Sammy. Logan had developed a good track record in trusting his gut when it came to people, and thus far his gut had been telling him to hold off in passing judgment on Sammy al-Dajani until he knew more about the man, and he planned to do just that.

Also present were three younger female officers who Logan had found early on could nearly always be depended upon for solid informational input where needed: Patricia McGill, Senior Vice President and Controller; Colleen Murphy, Vice President in charge of Bank Audit and Compliance; and finally Jennifer Goodell, Vice President in charge of Human Resources. This hard working trio of friends were often referred to by some of their far less capable—and accordingly less successful—counterparts around the bank as the “iPad Pals.” It was a good-natured jibe resulting from their penchant for constantly punching notes into identical, hand-held electronic tablets during meetings of this sort, sometimes surreptitiously inserting snide text messages to each other when the ineptitude of others reared its ugly head. Rounding out this already substantial representation of bank management were also the lead lenders from each of the bank’s loan divisions, primed each one for the always dreaded problem loan discussions.

Aside from the computer tablets held by each of the iPad Pals, on the table in front of nearly every bank officer and OCC examiner alike was a lineup of individual laptop computers. Those belonging to bank officers were tied to the bank's intranet for informational reference in discussions, and all the OCC’s computers were wirelessly connected to their central computer system for immediate, online update of findings during the examination and related discussions. Logan noticed with some amusement, however, that even though Paul Trotter was equally equipped with online connectivity, he still appeared to be reading from and making reference to notes written on 5x7 cards of various colors in the same manner used by regulators in years past.

Logan could tell by looks on the faces of the examiners that they perhaps considered such a large gathering of bank management a bit of overkill, but Scott Kruse had claimed that he wanted no questions from the examiners left unanswered. As he put it in the e-mail sent to everyone regarding the time and place of the meeting, “The more we’re able to take care of in this one session with examiners, the better off we’ll be in the long run.”

After introductions of bank management, the conduct of the meeting was essentially turned over to the OCC, with Kruse indicating that Paul Trotter would function as moderator in his capacity as Senior Examiner. Trotter then reciprocated with an introduction of each of his examiners, explaining which areas of the bank they had reviewed and would be discussing. “With apologies beforehand,” said Trotter, “I should begin by telling all of you that I would expect this meeting to last a goodly part of today, but since most of us with the OCC need to leave early this afternoon to attend a special function, our discussions could very likely extend over into next Monday. We have a great deal to go over.”

“Sounds fine, Paul,” Scott replied. “These meetings are as important to us as they are to you.” Expressions on the faces of bank staff in the room suggested universal doubt as to Scott’s sincerity in that regard. Examinations were never pleasant, and several had heard him previously bemoan having to deal with bank regulators.

“Great, let’s get started, and try to free up as many of your bank team as we can, as early as possible,” continued Trotter. “To do that, I’m suggesting that we spend the first few hours of the meeting discussing the results of our investigations into those areas of safety and soundness where we have fairly well completed our work and found little concern. Then if time permits, I would like to spend whatever is left of the morning discussing some questions we have regarding certain insider loan and account relationships under Federal Reserve Regulation O, the Financial Institution’s Regulatory and Interest Rate Control Act or FIRA and the bank’s handling of its requirements under the Bank Secrecy and U.S.A. Patriot Acts—the latter of which as I’m sure you all know had certain portions amended and extended in 2015 by the Freedom Act.

“BSA and Anti-Money Laundering, Paul? You know, Reg O and FIRA I understand, but I admit to being surprised at hearing you and your crew were looking at BSA and AML-related matters here at the bank with this visit. I’ve been meaning to talk with you about that since your arrival. Those are areas of bank regulatory compliance aren’t they?” Scott Kruse sounded perplexed. “Isn’t that normally part of a separate examination?”

“Yes, you’re correct about that, Scott; and I’m glad you asked. The exam that we are currently conducting is indeed a review of safety and soundness, not regulatory compliance; and Global United most assuredly is scheduled for a full compliance examination sometime around the second quarter of next year. Nevertheless, BSA and Anti-Money Laundering compliance are such continuing hot-buttons with the Comptroller and other agencies of government these days that we’ve been asked to still have a look-see at how the bank is handling things in those areas of concern while we’re here. So, we’ve been doing that and we’ll need to discuss some of our findings there as well,” answered Trotter.

“Never mind, that’s fine if it’s what you feel you need to do. It was just my understanding that was typically part of a separate compliance exam, and it had made me curious when I heard you were also looking into those areas of the bank this time around. Any idea as to how long that part of our discussion will take?

“Oh, I would say if our questions regarding those and other non-lending areas of the bank don’t lead us too far afield in getting the answers we need, we should be able to finish most of that this morning. That being said, I suppose if it helps and you folks have no reasons otherwise, I would think any members of your management team here having to do with the lending side of the bank could feel free to go back to work until we’re ready to call them back in. But I’ll leave that up to you.”

“I guess I’ll defer to Logan here on that,” answered Scott with a quick glance at his new number two.

“And you think you will be finished with the non-lending areas by noon, do you?” Logan asked.