April 19, 2004
Mr. John M. Reich, Vice Chairman
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, D.C. 20429-0002
Dear Mr. Reich:
This letter is
in reply to your correspondence dated January 22, 2004 requesting
recommendations to reduce regulatory burdens derived from lending-related
consumer protection rules involving community banks.
It seems only
a short time ago when the regulatory authorities were requiring
banks to prove that their services were available to prospective
customers. At that time regulators were making a serious effort
to require community banks to identify all loans in order to prove
that their service was being extended within our lending policies
almost as if we were guilty until proven innocent.
The CRA certainly
fell into this category although we recognized there has been some
reduction in requirements. Our real point is regulators must administer
CRA recognizing that locally owned community banks have little,
if anything, to gain by refusing to do business in their own community.
Surely your examiners can pick up a bank, which is buying all of
their loans outside of their communities, and call for a CRA examination.
It should not take the effort to document our files which is not
only expensive but time consuming taking away a great deal of our
service capabilities from the public. At this point, we have been
of the opinion the FDIC and probably other related regulators are
even guiltier of eliminating service for the public by financial
institutions.
The new Patriot
Act has a number of major problems where the community bank is
concerned. The need for community banks to acquire identification
from lifetime known customers to be documented with picture ID’s
is again an expensive waist of time.
The Privacy Act
now requires banks to send annual privacy statements to our customers.
Surely most of your examiners can confirm it is not beneficial
for everyone to acquire printed privacy act information handed
to them by their bankers, their doctors, their dentist, their attorney
and so on. Surely, the public has the ability to protect themselves
through the courts of a flagrant violation of their privacy by
community banks or any other financial business.
Requiring community
banks to develop an independent valuations for all lending functions
which seems non productive and non-consumer friendly. An individual
buying a car and borrowing $25,000.00 on his $100,000.00 house
requiring an outside appraisal at a cost of $120 or more, time
wise, is subject to lose his opportunity to purchase a certain
car in this manner due to the time involved in developing a real
estate transaction. We admit this example is probably excessive,
however, we can think of a hundred similar situations. Many people
today are using their real estate for the purchase of land, second
homes, equipment, the consolidation of debt as well as automobiles.
In many cases the time and expense sacrifices the service contemplated
due to the excessive effort to regulate. Please believe me, there
are many many opportunities available to reduce bank regulation
to the advantage of the consumer.
Sincerely,
A. J. King
President
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