Author Archives: Ken Agle

Next Level Risk-Based Pricing is Coming: Beyond Decisioning and Pricing is Outcome Analysis

When economic times are good and funds are relatively easy to lend without meaningful short-term risk, most financial institutions find themselves in strong positions from a credit risk and earnings perspective. Yet, the tough lessons of lending and risk over the past 30 years have taught us many times over that economic cycles repeat. It’s an all-too-often forgotten pattern that reminds us that good times, which always seem to feel like they are here to stay, only last so long.

Each of the major economic Continue reading →

Lessons from Troubled Restaurants for Financial Institutions

I’ve become a huge fan of a reality show called Restaurant Impossible. It features a host, Chef Robert Irvine, who visits a restaurant in some level of disarray and attempts to completely overhaul it in 48 hours. This overhaul is usually filled with tears and trauma. After all, some of these restaurant owners have worked their entire lives to build their establishment. Some even once experienced tremendous success, but something has gone terribly wrong. Most are months, weeks, or even days from closing. I’ve observed that these Continue reading →

BSA/AML Systems Survivor

Imagine two scenarios. In the first, you fly to a beautiful, remote island for a carefree week at an exclusive and all-inclusive resort. You spend the week soaking up sun on the beach, enjoying fine dining, and snorkeling in the crystal clear water.

Now for scenario two. Same beautiful island, but this time, there’s no resort, no gourmet chefs, and no king size bed. In fact, there’s nobody but you. This time you’re stranded. Despite your circumstances, you’re still able to appreciate the beauty of Continue reading →

How to Optimize Your AML System (Without Hiring Sherlock)

One of the defining characteristics of Sherlock Holmes (besides the deerstalker hat and overcoat) is his almost superhuman powers of deduction. In the first Sherlock novel, A Study in Scarlet, Holmes says, “From a drop of water, a logician could infer the possibility of an Atlantic or a Niagara without having seen or heard of one or the other.” In every Sherlock story since, Sherlock does indeed turn tiny, seemingly insignificant details into solved crimes. Now, if you’re tasked with evaluating a Bank Secrecy Act Anti-Money Laundering (BSA/AML) system, you might Continue reading →

The Fair Lending Self-Assessment “Miracle”

Originally published in CU Insight

I’ll admit it: I’m a sucker for a good sports movie. One of my favorites is “Miracle,” the 2004 movie starring Kurt Russell, who plays Herb Brooks, coach of the 1980 U.S. Olympic hockey squad, which (and I’ll try to avoid any spoilers here, but the movie’s title might have given it away already) had a very good run that year.

As I consider where we are today in terms of Fair Lending, there are two scenes from the movie Continue reading →

Enterprise Risk Management: Four Elements to Ensure a Perfect Fit

People come in all shapes and sizes. Clothing manufacturers know this, and generally have a wide array of different sizes available. However, if you want your clothes to fit well and be comfortable and stylish, and if (like most of us) your proportions aren’t the same as the generic person the clothing was designed to fit, clothes shopping can become very difficult. This is where the tailor comes in very handy.

Financial institutions, while not quite as abundant as people, also come in all Continue reading →

Fair Lending Model Validation: Strengthening Your Fair Lending System

Pendulums tend to swing, and the Fair Lending pendulum is no exception. Over the last few years, with the transition of HMDA rulemaking to the Consumer Financial Protection Bureau, and with the CFPB’s new final rule expanding HMDA data collection requirements, it’s clear that the pendulum has been swinging toward a tougher regulatory environment. With the change in administration, however, it appears that the pendulum is going to be heading back the other way. Precisely when and how far it will swing remains to be Continue reading →

The Third Dimension of an AML Risk Assessment

Originally published on

When I was young, a teacher shared an analogy that has always stuck with me. I can’t exactly remember what she called it, but I’ve taken to calling it “2-D Bob Meets 3-D Jill.” My teacher started by sketching a diagram on the board that looked something like this.

Bob has invited some friends over to play cards. Everything in Bob’s world is 2-D, including Bob, his friends, the card table, the cards, and even Bob’s house. Everything exists on Continue reading →

Lessons From BancorpSouth’s Fair Lending Woes

Originally published on

BancorpSouth Bank, headquartered in Mississippi, took a $10.6 million misstep when its mortgage lending practices allegedly discriminated against African-American consumers. While the bank has not admitted to the allegations, it did agree to a proposed settlement and consent order with the CFPB and the U.S. Department of Justice of charges that the bank’s mortgage lending practices violated the Equal Credit Opportunity Act and the Fair Housing Act.

Fair lending laws and related regulations date back to the civil rights movements of Continue reading →

The Look-Back Project: An AML Marathon

The annual New York City Marathon is just a little over two weeks away. If you’re planning on running in it, you hopefully began training many months ago. Unless you’ve got some superhuman characteristics, the average person can’t simply run a marathon on a whim, without any training.

However, if information comes to light that indicates your financial institution has some holes in its AML monitoring process and may have missed some suspicious transactions, you could suddenly be feeling like you have to run Continue reading →