TAYLOR BANK
August 26, 2004
Mr. Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corp.
550 – 17th Street, NW
Washington, DC 20429
Re: Reducing
Regulatory Burden Consumer Protection Regulations
Dear Mr. Feldman:
We applaud the efforts of the regulators to reduce regulatory burden
on the financial services industry. In spite of our strong 114-year
history, we experience severe regulatory burden during exams and
in daily operations. Our comments are:
• Privacy
of Consumer Financial Information – Privacy
notices are required to be mailed annually. This should be changed
to mail only if wording of the privacy notice has changed, rather
than an annual mailing, which no one reads.
• Safeguarding
Customer Information – Gramm-Leach Bliley
has gone too far. The banking industry has always been concerned
about protecting our customer’s information. Once a written
policy has been developed by the bank, and accepted during an examination,
it should not be subjected to changes by a subsequent examination
and subsequent examiners. Banks are continually having different
examiners hold us to different standards based on their opinions
of how the regulations should be enforced.
• Electronic
Fund Transfers – Reg E – ATM
Disclosures - Banks are required to post a notice of the ATM fee:
#1-a prominent
location at the ATM and #2-either on the screen or on paper. This
is a useless duplication.
Customer Liability – Permitting a customer to notify the bank “within
2 business days of learning of the loss” makes no sense. The
customer must assume more responsibility for not protecting the card.
We recommend that the customer’s liability be increased from
$50 to $250 and make the clock start upon the banks receipt of the
first unauthorized transaction – giving the customer five business
days from that time to report the loss.
Merchant Liability – Merchants that accept signature based
debit card transactions
should be responsible for unauthorized signatures. I have personally
witnessed a Wal-Mart cashier accept a debit card signature based
transaction without even comparing the signature on the sales receipt
with the card. A comment from one Wal-Mart cashier indicated that
it’s “the bank’s problem”. Merchants have
no loss exposure therefore they do not care.
• Reg
D & Q – Business checking – Permit
banks to pay interest on business transaction accounts. The current
limitations
no longer serve a public purpose and are ineffective. The prohibition
is circumvented daily by sweep accounts and similar vehicles. Permitting
banks to offer interest directly on demand deposit accounts will
help smaller institutions compete with other financial providers,
such as money market mutual funds, resulting in greater market and
institutional efficiencies. For competitive and fairness reasons,
it is time to modernize this provision.
• Truth
in Savings – Reg DD – Shouldn’t
consumers be provided similar interest rate disclosures from credit
unions in order to make an informed decision? Credit Unions should
not be exempt from this regulation.
• Advertisement
of Membership – This
regulation should be simplified to simply state if the advertisement
is for deposits
we must use your logo. Listing all of the exceptions to the regulation
is very cumbersome.
• Deposit
Insurance Coverage – The
amount of coverage should, at a minimum, be indexed for inflation
and increased accordingly
on an annual basis.
• USA
Patriot Act – While
we are aware this regulation is not on the comment list, we wish
to state that complying with
this act is a very time consuming burden placed on community banks.
Law abiding customers are offended by these rules, especially if
the bank knows them. This is another example of over-burdening small
community banks with a regulation targeted toward large regional
and super regional banks that may not have that personal relationship
with their customer.
• Bank’s
have been increasingly placed in the role of enforcement agents
for
various federal and state programs including
by not limited to large cash transactions or suspicious transaction
monitoring and reporting, delinquent child support reporting and
collection, tax lien data reporting and collection and the placement
and continuance of flood insurance. While financial institutions
are logical data gathering points for this information, there is
a burden on our personnel and data processing resources for which
we bear the cost. Federal and State Governments should compensate
financial institutions for their participation in these programs,
which are not designated to benefit the participating
bank or consumer, but to accomplish some broad socio-economic purpose.
The compensation could be by submission of an invoice or even a
fix-dollar direct tax credit for participation in each program.
• Questions
directed to the FDIC. Banks frequently ask the
FDIC questions. The standard answer from FDIC employees is “we
will not answer that. Look up the regulation and the answer is there”.
The Fund has more than $33 billion of banks money, yet we cannot
get an answer to our questions. With our huge regulatory burden,
it is rubbing salt in the wound to tell banks find the answer yourself.
As a result of the current regulatory environment, it will be difficult
for small community banks to continue to return solid profits and
returns to shareholders, not to mention sound asset quality, if senior
management continues to be over burdened with compliance.
I will be glad to expand on any of the above. We look forward to
working with the FDIC in keeping the banking industry as a symbol
of confidence.
Sincerely,
CALVIN B. TAYLOR BANKING CO.
Reese F. Cropper, Jr.,
Chairman and CEO
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