The examiner, the banker, and the cold dead coyote

In 35 years of reporting on an industry you meet an awful lot of people. Some you forget, some you remember, and some you remember but under the wrong name.

That last phrase is not a matter of oncoming Alzheimer’s, though one disquieting thing is more and more finding myself interviewing the sons or daughters of bankers I knew way, way back, who followed a parent into the business.

But in Dan Soto’s case, things are more complicated.

And that’s why this story features a banker, a bank examiner, an ABA Distinguished Service Award winner, a cold, dead coyote, and “Sam Daniels,” the man who never was.

Dan Soto’s well-earned award

Last week Dan Soto received ABA’s 2014 Distinguished Service Award, which recognizes “leadership, initiative, and accomplishment in banking regulatory compliance management.” The association’s Compliance Administrative Committee makes each year’s selection. (Three of bankingexchange.com’s bloggers—Lucy Griffin, Nancy Derr-Castiglione, and John Byrne are past recipients of the award, and frequent contributor Lyn Farrell received the award in 2013.) Dan received the award from Megan Hodge, vice-chairman of ABA's Compliance Advisory Committee and chief compliance officer, RBC Bank. (See photo below.)

Today Soto is chief compliance officer at $97.8 billion-assets Ally Financial Inc., formerly GMAC Bank, having joined the company in 2009. Before joining Ally, he made a name for himself in BSA/AML at Wachovia and Wells Fargo and several other large banks. Prior to that Soto worked at the Fed, where he helped develop its BSA/AML compliance exam procedures.

Before that, he served as an FDIC bank examiner, and in accepting his award at the kickoff general session of last week’s ABA Regulatory Compliance Conference, he chose to remember his early days in that job.

Soto is a graduate of the University of Nebraska, and he recalled how he and a childhood friend both decided to try out for an FDIC internship in 1981. His friend was a banker’s son. Soto was the son of a farmer. They both saw a connection to bank regulation. Both made the program, and together they went seriously about their first joint assignment.

Back then, examinations frequently weren’t announced in advance. It was still the day of sudden cash counts and such.

As Soto told the record crowd at ABA RCC, he and his friend strode into the lobby of First Westside Bank in Omaha, Neb., waving their FDIC ID and announcing they were there to examine the institution.

“We were so thrilled,” said Soto. “The problem was, we were supposed to be in the First Westroads Bank in Omaha, Neb. Lesson learned.”

Soto told another story on himself from his days at the Fed, where for a time he worked for Rick Small, a leader there in BSA/AML, who today is a senior vice-president in the same expertise areas at American Express. The lesson Soto learned at the Fed from Small, said Soto, was to always back your people.

“Rick and I were at a State Department function, and I decided to make a political statement in front of a lot of officials, both domestic and foreign,” recalled Soto, “and there was vehement resistance to what I’d just said. Rick stood up and said, ‘You’re all wrong. We’re right. Dan, let’s get out of here’.”

As the pair walked back to the Fed’s headquarters, said Soto, Small turned to him and asked, “What the hell were you thinking?”

Fortunately, for this story, Small didn’t skin Soto alive.

Dan Soto, “Sam Daniels,” and the dead coyote

After the session ended I went up to congratulate Soto. We’d met for the first time three years earlier—or so I thought at the time—when he’d been half of a two-person panel discussion at the 2011 ABA Regulatory Compliance Conference.

I’d introduced myself and Soto said, “You know, we’ve met before.”

Now, as I said, reporters meet many people. There are one or two conferences, like RCC, that I attend annually, and I have a nodding acquaintance in the hallway with more than one party whose name or employe I can’t for the life of me remember. I feel badly about that.

But I’m staring at Soto’s face, and I haven’t a clue. I think John Byrne had recommended him more than once as a good source, but for one reason or another we have never linked up. So, complete blank.

I confess it to Soto.

And I say I am embarrassed to admit as much.

Soto utters just two words:

“Sam Daniels.”

It all comes flooding back. And I say:

“The dead coyote!”

Anatomy of a bank examination

When I first met Dan Soto, it was about five years after he and his friend had walked into the wrong bank in Omaha. We met in a community bank in central Nebraska, about three hours west of Omaha. It’s late 1985, and he has become a commissioned bank examiner.

This is no boondoggle trip. I am way out there, in the midst of the ag lending crisis because, after much negotiation with FDIC, I am to be embedded for a week with a safety-and-soundness examination team that’s looking at a farm bank. It was the first time a reporter was permitted to sit in on a federal bank exam and write about it, and we followed it over the next few years with the first article about an OCC compliance exam from the inside and another about OCC streamlined safety and soundness exams.

It is the middle of winter and colder than I have ever experienced, I think. In that part of Nebraska the land is absolutely flat, and you can see for miles, although out on the highway there isn’t very much to see, sometimes, because of the snow. One night about halfway through my time there, a blizzard hits, creating an evening whiteout.

The arrangement with FDIC required that the bank not be identified in the article, nor the members of the exam team. So, from the outset, I explain to the crew that they’ll be able to spot themselves in my article by the initials, reversed, of their own names. Hence, Dan Soto’s initials, DS, are flopped to render SD, which fits the made-up name of “Sam Daniels.”

“Sam Daniels”/Dan Soto is the second in command of the exam. He reports to the more-experienced “Patrick Chapman,” the bank’s examiner-in-charge.

In the morning, Chapman, with whom I’d eaten dinner the night before in Grand Island, walks me into the bank to meet the bank president, “Harry Anderson,” and the exam team.

On the way in, Chapman happens to glance in the back seat of a vehicle parked in the bank’s lot—I recall it being a station wagon or something like a Jeep—and does a bit of a double-take.

I am none the wiser to what he’s seen, and frankly am concentrating on meeting the banker and the team. I’m on sensitive ground, this being a first. I’ve already met with a veteran examiner out of the New York FDIC region for a primer on the agency’s techniques—now I realize it was probably something of a test—and I’ve been reading manuals and more in preparation.

So, I meet the banker and am brought back to the bank’s boardroom to meet the team, including Daniels. As everyone begins setting up for the day, the “EIC” is asking Sam Daniels/Dan Soto about what he saw in the back of Soto's vehicle. I hear somebody say something about a coyote, but Chapman begins razzing Soto about driving around with a dead dog in his car.

I don’t have any time to ask because the morning is filled with lots of orientation. I spend time with both Chapman and Daniels on the loan files that they and their junior associates are going to be working on that morning. I forget all about the creature.

But midday, the team invites me to join them for lunch at the local Pizza Hut. I drive with Chapman, but in the restaurant lot I walk past Daniels’ vehicle, and in the back, frozen stiff, I see what for all the world looks like a big dead dog.

At lunch, Daniels is still being kidded by Chapman and the crew of trainees. Soto has been a pretty friendly, approachable guy, so I ask him why you would want to drive around Nebraska with a frozen dead creature in the back.

I’m from the East, don’t hunt, and generally clean fish that I catch that I’m going to eat as soon as I can.

Daniels/Soto didn’t shoot the coyote, he just spotted him on the side of the highway—basically intact road kill frozen courtesy of the extreme conditions.

The examiner smiles and says, “I’m going to skin him.”

Again, I’m from the East. “Why?”

“Why?” says Daniels/Soto, to some of his associates as much as to me. “Well, that pelt’s going to be worth $25.”

That seems to resonate around the table. None of these young people, more or less my own age at the time, is getting rich on government scale, so they all “get it.” Twenty-five bucks is a good chunk of a night out in 1986.

Well, I’ve been telling that story for a good number of years now, in the anonymous, and the only reason I can link Soto’s name to it now is that the name of the bank came out a decade or more ago through an official channel and at that point the wraps were pretty much off. But that’s a story for another time.

For now we’ll just leave Dan Soto enjoying his award, which you’ll agree looks much better in an office than a ratty old coyote pelt.

Author’s note: All these events took place nearly three decades ago, and I make no claims for perfect memory. But Dan Soto laughed when I asked his permission to use this long-ago story and I hope you will, too. At least this is a story where the bank didn’t get skinned by an examiner!

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