From: Grant Dean
Sent: Thursday, March 25, 2004 10:29 AM
To: Comments
Subject: EGRPRA Comments
Grant Dean
Box 431
Glenwood, IA 51534
March 25, 2004
Dear FDIC:
I am writing on behalf of Glenwood State Bank, a state-chartered
bank
located in Glenwood, Iowa. Our customer base is primarily agricultural,
but is trending consumer as we are becoming a bedroom community to
Omaha,
Nebraska. Our current asset size is $90,000,000 with a total consumer
and
residential real estate loan portfolio of $15,000,000. We appreciate
the
efforts of the Office of Comptroller of the Currency, Federal Reserve
Board, Federal Deposit Insurance Corporation and Office of Thrift
Supervision, “the Agencies”, in reviewing the current
consumer regulations
to identify outdated, unnecessary, or unduly burdensome regulatory
requirements pursuant to the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 (EGRPRA). We also appreciate the Agencies’
recognition and understanding of the challenges faced by community
banks
in meeting the requirements of the ever-growing number of compliance
regulations.
I would like to offer the following comments regarding the current
regulatory rules and environment:
The recent revisions to Reg. B which prohibit lenders from assuming
the
submission of a joint financial statement constitutes a request for
joint
credit and now requires whenever more than one individual applies
for
credit, those applicants sign a separate statement of intent to apply
for
joint credit creates additional documentation for creditors and is
often
very difficult to manage, particularly in commercial and agricultural
transactions involving two or more borrower who are operating the
business
jointly but have not legally organized; for example a husband and
wife or
father and son operating a farm together. Many of these borrowers
consider themselves a “partnership” although they are
not legally
organized as such. Rather than evidencing intent for each application,
creditors should be given the latitude to evidence intent for a specific
purpose, such as 2004 agricultural operating expenses. Many times
business borrowers have unanticipated credit needs and time is of
the
essence in filling those needs. If a creditor determines the borrowers
are creditworthy and the purpose of the loan meets the intent statement
previously affirmed, it seems redundant and burdensome for both the
applicant and creditor to obtain an additional statement of intent
for
each application/loan for that intended purpose.
The collection of monitoring information continues to be problematic.
Lenders are often confused as to when to collect the data and when
it is a
violation to collect it. With the growing use of home equity loans
and
lines of credit in the market place, does it not make more sense
to either
collect monitoring data for all loans secured by a borrower’s
principal
dwelling or eliminate collection all together for non-HMDA and small
bank
CRA reporting entities? It certainly would lead to less Reg. B violations
during exam procedures. The Agencies can be assured if a bank were
guilty
of discriminatory practices, local consumer groups, state’s
attorney
generals and individual consumers would alert them.
The new definition
of “refinance” which
removes the purpose test will
undoubtedly result in the added reporting of many loans whose purpose
has
nothing to do with home purchase or home improvement. Commercial
and
agricultural loans will now be reportable at that time they are refinanced
and retain a security interest in a dwelling. Another example would
be a
farm loan, which is exempt from HMDA reporting when the farm is being
purchased, becomes reportable if the farmland (which contains a dwelling)
is refinanced. Obviously, business purpose loans are priced very
differently from residential real estate loans. In all likelihood,
the
data collected on these loans will not be useful to the Agencies
during a
fair lending review, thus all of the banks efforts to collect and
report
the data are wasted – a true burden! This is also burdensome
for
regulators, as they will have to “sort” through the data
submitted on the
LAR and loan files to determine loan purpose and explain LAR variances.
Once again, thank you for the opportunity to comment on these very
important issues. I appreciate your serious consideration of my concerns
over the above-mentioned regulatory burdens currently facing America's
community banks.
Sincerely,
Grant C. Dean
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