From:
Jean Knakmuhs [mailto:jrknakmuhs@statebankoflucan.com]
Sent: Friday, October 08, 2004 2:33 PM
To: Comments
Subject: EGRPRA Burden Reduction Comment; OCC Docket 0418; Fed Docket
R-1206; OTS 2004-35
Jean Knakmuhs
P O Box 138
Lucan, MN 56255
October 8, 2004
Comments to FDIC
,
Dear Comments to FDIC:
As a community banker, I support the EGRPRA project and commend
the
banking agencies for their efforts to identify outdated, unnecessary,
or
unduly burdensome regulatory requirements. As an officer in a small,
hometown bank, we struggle to adequately service our clients due
to all
the time spent on outdated and unnecessary regulatory requirements.
I
have the following comments concerning the regulations that are currently
being reviewed and are categorized as Consumer Protection: Account/Deposit
Relationships and Miscellaneous Consumer Rules.
Privacy of Consumer Financial Information
The annual privacy notice that banks must send to customers is not
only
very burdensome and costly but the language for the notices required
by
law and regulations is confusing to customers. An optional short
form
notice would be welcome, but it should replace - not supplement -
the
existing notice. Since we have already developed processes and procedures
to comply with existing requirements, use of a short form notice
should be
at the bank's option.
Even more important, we should not have to send out an annual notice
if we
do not change our privacy policies and procedures. We give our customers
the notice at account opening. That should be enough, especially
since we
are happy to provide information about our privacy policy upon request.
The annual notice is particularly unnecessary for community banks
that
share information only as permitted by one of the statutory or regulatory
exceptions.
Truth in Savings (Regulation DD)
Even though we are used to the many disclosures required under Truth
in
Savings, most of our customers pay little attention to the disclosures.
Many of them end up in the trashcan. There is a cost to developing
the
programs and procedures to produce these disclosures, but if consumers
are
not paying attention to them, then this is a perfect example of a
needless
regulatory requirement.
The banking agencies should study whether these disclosures are
truly
serving their purpose. All interested parties should be involved
in the
study, including banks, consumers and software providers. Regulation
DD
would be an ideal regulation for streamlining and simplification
to save
banks from unnecessary costs and burdens and to improve disclosures
to our
customers.
Deposit Insurance Coverage
The FDIC has taken steps in recent years to simplify the rules about
deposit insurance coverage, but the rules still need simplification
and
streamlining. Customers know that they can organize accounts to expand
coverage beyond $100,000, but how that works and what steps are needed
are
confusing to both consumers and front-line bank employees. Broader
dissemination of the tools the FDIC offers would help. For example,
the
EDIE CD-ROM should be distributed to every branch office of every
bank.
We would support simplification of the rules provided it does not
reduce
the ability of individual consumers to expand coverage, especially
since
the coverage levels have been steadily eroded by inflation since
they were
last raised in 1980.
Consumer Protection in Sales of Insurance
The disclosures required by these regulations do not fit certain
products
including credit life and related products, debt cancellation contracts,
and crop and flood insurance. The focus of the rule should be on
insurance products that are similar to a deposit product and that
a
consumer might confuse with a deposit that is FDIC-insured. Bankers
find
it burdensome to disclose each time they sell a customer credit life
insurance, that credit life insurance is not a deposit and not
FDIC-insured nor insured by any federal government agency. They also
find
it burdensome to obtain the consumer's written acknowledgement of
the
disclosures each time an insurance product or annuity is sold.
Electronic Fund Transfers (Regulation E)
Consumer liability from unauthorized transactions resulting from
writing
the personal identification number (PIN) on a card or keeping the
PIN in
the same location as the card should be increased from $50 to $500.
It is
unfair for banks to be presumed liable in every instance for unauthorized
electronic transactions. Furthermore, the notification requirement
under
Regulation E for a change in account terms or conditions should be
extended from 21 days to 30 days. This would make the notification
timeframe consistent with Regulation DD and would simplify compliance.
Thank you for the opportunity to comment.
Sincerely,
Jean R. Knakmuhs
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