Up to Her Elbows in Compliance: Carolyn Mroz Doesn't Just Pay for Compliance-She Lives with It Every Day. the Chairman of ABA'S America's Community Bankers Council Argues That Good Intentions Don't Always Yield Good Results for Consumers, Communities, or Banks

A stiff morning breeze from Chesapeake Bay chills the Baltimore County, Md., community of Edgemere, and Carolyn Mroz arrives at her desk, glad to get out of the cold. But she can't sit down just yet because her swivel chair is occupied by a malfunctioning burglar alarm. It comes from "Todd's Inheritance," a War of 1812-era historical house where the savings banker serves as historical society chairman and "jack of all issues." She chuckles about that alarm. The contraption was left earlier that day by a state park ranger who doubles as caretaker of the house, and Mroz (pronounced "Mur-roz") is where the buck stops for that kind of thing. Mroz moves the assorted parts to the floor, so she can sit, and that's when you begin to take in the room. Mroz is also where the buck starts--she's a community banker, and this is no trophy office. No walls lined with oak, brass, and glass, hung with golf memorabilia, sports trophies, or photos with VIPs. Look around and you'll see more than traces of something that leaves Mroz colder than a December breeze off the bay: Compliance. "It costs us a fortune" Mroz's office is stacked and crammed with banking information everywhere, and a huge portion of it deals with compliance issues. Her bookcase groans with the weight of well-thumbed manuals on compliance and human resources topics, including a big orange binder that anyone with a bank compliance history knows well. None of this is for show. Want to talk RESPA? She'll tell you more than you ever wanted to hear. Want to dig into the Fed's new overdraft rule? She'll bring her own spade. Bring up just about anything to do with mortgage compliance, in fact, and she knows the compliance like you know your own name. Her bank, Bay-Vanguard Federal Savings Bank, has been a portfolio mortgage lender for decades. Mroz understands the whys and wherefores of regulations such as the Bank Secrecy Act. But there's much about compliance that irks her. The right of rescission is a good example. During the 37 years that Mroz has been a savings banker, she has seen three people actually exercise their right of rescission. "All that paper, all those mailings, all that irritation of customers who don't understand why they can't get their money right away--for three people?" says Mroz. [ILLUSTRATION OMITTED] A brake on banking Yet Carolyn Mroz isn't a compliance officer--not by title, anyway. She's the president and CEO of $153.8 million-assets Bay-Vanguard. It is an institution where everyone wears many hats. [ILLUSTRATION OMITTED] "Basically, I keep up with the new regs when they come out, or I come up with a committee and we handle the reg by committee," she says. "Time that I should be spending out there generating new business I'm instead devoting to keeping up with rules and guidance and training my staff to get them up to speed," says Mroz. "Regulation isn't a free ride--in fact, it's a very expensive trip," she says. "Think of all the disclosures we have to make, all of the disclosures we have to print. Ali the paper used to make one loan. That all costs money." And in some ways, the costs are counterproductive. "These expenses shrink the bottom line," says Mroz, "which takes away money we would have had available to lend, which is what Washington wants us to do." Even BSA compliance, as essential as it is, bleeds off vital funds. Mroz says Bay-Vanguard pays $25,000 annually to have its program audited. Democratic banker takes on CFPA Bring up the Obama Administration's proposed Consumer Financial Protection Agency and Mroz rolls her eyes. "What is going to make that regulatory agency more effective than the five federal regulators we have now?" says Mroz, whose bank is regulated by the Office of Thrift Supervision. "It's overkill," she adds, sounding a bit Republican and conservative. …