Peoples State Bank of Francesville
From: Roger Cummings
Sent: Thursday, August 26, 2004 10:12 AM
To: Regulatory Comments FRB; Comments; regs.comments@occ.treas.gov;
regs.comments@ots.treas.gov
Subject: EGRPRA
Regulators,
I would greatly appreciate an honest effort to reduce regulations.
I am the president of a small bank in rural Indiana, $139,000,000.
Regulations have reduce our efficiency greatly. We spend resources,
both financial and personnel, to make sure we aren't going to violate
some regulation knowing full well that we will because there are
so many and they are so complicated. The government bureaucrats
think that this regulation won't cost much. Maybe individually
they don't but they add up quickly.
We are in the process of mailing out our annual privacy notice
that nobody reads. We are a small institution that mailed our 5,845
notices. Postage, printing cost, envelopes, mailing labels and
staff time cost us about $5,000 or almost $1 per notice. Take that
times the number of notices sent by all banks, how about all those
required to send notices. Now, how many notices does the consumer
read from their credit card companies, banks, insurance companies,
investment providers etc. This is one of the most costly regulations
that provides very little return. It would seem that if we provide
the notice to a customer once and anytime we changed our policy
we provided a new notice. If we made the notice available upon
request that should provide sufficient opportunity to review it.
It is posted on our web site also.
Take a mortgage loan file and see how many documents are required.
First, consumers have no idea what the file contains and just sign
were ever they are required to. It would make sense to consolidate
and better yet eliminate some of the documents. Regulations are
added and changed which cost the bank and the consumer. We now
charge $250 to process a mortgage loan. That is to cover mostly
the compliance costs and that doesn't include the flood determination
for property no where near a river or a flood area. Every mortgage
pays $18 for a flood determination when we would have to go back
to Noah's time to flood that property.
We just had our CRA examination. The examiner said that a community
bank would have a difficult time receiving an outstanding rating
because we have to prove that we actively have programs for low
income areas. It doesn't matter that our loan portfolio reflects
that we loan in all areas and are serving our communities. That
we have staff involved in community organizations etc. It matters
how much we spend on programs for window dressing to make it look
like we are doing things specifically for CRA.
It is my opinion that the regulators would like to see fewer banks
and that the small ones can be choked out by overhead costs related
to compliance. How can a $50,000,000 bank afford the compliance
burden that has increased with GLB and other new regulations? There
will be more consolidations among the small banks. Do the regulators
care what it does to a small community when they loose their local
bank. We employ about 25 peoples in a town of less than 1,000.
If we were to sell or merge with a bigger institution it would
take 6 to run the branch. More importantly will be the loss of
community leaders which there is already a shortage of. We are
at the point that we need to merge with another community bank
to reduce our overhead costs. If we can't control the costs we
will no longer be competitive in our markets.
I hope this effort is serious and that there will be reductions
in compliance cost. I have a hard time believing it will happen
while I'm in banking but let's hope so.
Roger Cummings
Peoples State Bank of Francesville
Francesville, IN
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