PONY EXPRESS COMMUNITY BANK
August 3, 2004 Robert E. Feldman, Executive Secretary
Attn: Comments / Executive Secretary Section
Federal Deposit Insurance Corporation
550 17th Street NW
Washington, DC 20429 RE: Comments -- FIL-63-2004 I have reviewed the above-reference FIL and wish to make some constructive comments. The basic premise of the proposed guidelines regarding overdraft accounts seems sound. I agree with the "Best Practices" and "Legal Risks" detailed in the FIL. Regarding the "Safety & Soundness Considerations", I suspect that some financial institutions have become aggressive in paying consumer overdrafts without putting into place appropriate policies, procedures, and practices. Only in such instances does it seem appropriate to implement regulatory requirements such as precisely when an account should be charged off. While I agree, in principal, with the requirement that "overdraft losses (other than the portion of the loss attributable to uncollected overdraft fees) should be charged off against the allowance for loan and lease losses...", my opinion is that there should be reasonable latitude within this section. Overdraft accounts that become problematic have often times been so for some time and, in the later stages of the account's life cycle, the bankers have recognized problems were developing and paid very few of the checks. In such instances, the amount that would be appropriately charged to ALLL would be minimal in dollar amount. Where the dollar amount is minimal, the research and time required to determine the appropriate amount for ALLL does not seem warranted. In closing, I suggest that, if a financial institution actively and appropriately manages the risks of overdrawn accounts, regulatory guidelines are not necessary. If an institution fails to actively and appropriately manage the risks associated with overdrawn accounts - and such failure poses risk of imparment of capital, asset quality, and earnings of that institution - then the financial institution is engaged in unsafe and unsound banking activities. The regulatory agencies already possess the tools necessary for effecting change in such an institution's management and/or ownership. Thank you for considering my comments.
Very truly yours
Robert A. Means
President
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