April 17, 2014

1. the new regulatory Landscape: Leadership—The Key to Success DISCUSSION MATERIALS FOR: April 17, 2014 Samuel P. Golden Managing Director and Co-CEO ALVAREZ & MARSAL FINANCIAL INDUSTRY ADVISORY SERVICES, LLC

2. The New Regulatory landscape • New Rules • Supervisors under Scrutiny • Heightened Expectations for Enterprise Risk Management (ERM) • Consumer Financial Protection Bureau (CFPB) – Finding Its Way • An Unprecedented Focus on Compliance • Increased Attention to Anti-Money Laundering (AML) Laws • Summary

3. New Rules Significant Increases in Regulation and Oversight

4. Supervisors Under Scrutiny • Money Laundering Enforcement • HSBC, Standard Chartered, etc. • Servicer Reviews • London Whale Case (JPM) • Consumer Compliance (UDAAP, Fair Lending, Debt Collection, Over-Draft Protection, NSF Fees, etc.) • Leadership changes and internal reviews • A diminished role for judgment – Regulators have little incentive to take risk • As the number of appeals fielded by the OCC’s Ombudsman increases, published resolution standards are challenged

5. Heightened Expectations for ERM • Increased Board Responsibilities • ERM – No true threshold on an institution’s size • Capital Planning, Stress Testing, Recovery and Resolution Plans – Not just for the big banks • Increased reliance on quantitative analysis and stress tests • Risk Identification, Risk Assessments, Risk Tolerance, MIS, Independent/Systematic Testing, Validation and Oversight, and Board Reporting – The Key Ingredients for Effectiveness • Business units must act as the “First Line of Defense” • Document, Document, Document – Tell your story

6. CFPB - - Finding its way

7. An Unprecedented Focus on Compliance • Compliance Risk Assessment • Pre-Paid Cards, Overdrafts, NSF Fees, Debt Collection • Unfair or Deceptive or Abusive Acts or Practices (UDAAP) • Fair Debt Collection Practices • Residential Lending • Fair Lending – Treatment of Disability Income • HMDA – New Reporting Requirements • CRA – Evolving Consideration of Performance Context • Vendor Management • Customer Complaint Management • Recent Enforcement Actions • Business Units Must be Involved – They are the First Line of Defense

8. Increased Attention TO AML Laws • The “Bar Continues to Rise” • Recent Enforcement Actions

9. Summary • The “Bar Continues to Rise” – Be Prepared • Regulatory burden may be high – But the cost of remediating MRAs is much higher • Document, Document, Document – tell your story • Plan for examinations by doing examiners’ work for them • Pick your battles during and after examinations • Regulators have little incentive to take risk • Learn from the mistakes of others • Communicate, communicate and keep communicating • Strengthen and sustain your regulatory relationships – Trust is the key The Cost of Non-Compliance Has Never Been Higher!