NORTH DAKOTA BANKERS ASSOCIATION
April 20, 2004
Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Attention: EGRPRA Burden Reduction Comments
Re: EGRPRA Review
of Consumer Protection Lending Related Rules
Dear Mr. Feldman:
The North Dakota
Bankers Association (NDBA) welcomes this opportunity to support
the agencies’ ongoing regulatory effort to effectively analyze
and address regulatory burden for financial institutions. NDBA
is a trade association with approximately 100 state and national
banks and federal savings associations as members. NDBA members
operate offices in the largest and smallest communities in North
Dakota and work hard to provide our citizens with a broad range
of financial products and services. Without exception, bankers
tell us the burden of complying with so many federal consumer regulations
is real, and expensive, and that it diverts monetary and human
resources away from the banks’ core mission of serving customers
in a manner which meets their financial needs safely and soundly.
Most bankers want to reduce regulatory burden so there is more
time and money to spend on customer service, not to be relieved
of a responsibility to treat customers justly.
In North Dakota
bank customers are the neighbors of their bankers. Furthermore,
North Dakota bankers experience strong competition for each customer’s
business. If banks regard customers in a manner which is unfair,
or has a casual attitude about customers’ rights, those customers
will migrate to financial service providers who treat them better.
Bankers have strong incentives to follow consumer protection laws
and regulations and very few incentives to intentionally violate
them. We ask you to regard bankers as being “innocent until
proven guilty” as you consider means by which to reduce the
burden of regulation on financial institutions.
Equal Credit
Opportunity Act (Federal Reserve Regulation B)
Recently, the
Federal Deposit Insurance Corporation issued a new Regulation B
guide for bankers. Why? Because this agency felt bankers needed
detailed assistance to comply with and apply a complex regulation!
Equal credit opportunity shouldn’t be so complex.
120 North Third Street, Suite 200 ? PO Box 1438 ? Bismarck ND 58502-1438
Telephone (701) 223-5303 ? Fax: (701) 258-0218 ? Email: ndba@ndba.com
FDIC
April 20, 2004
Page 2
Signatures of
Spouses (Business Credit). Recently Reg B was changed to require
a married couple’s application for joint business credit
to be documented by the physical signatures of both spouses even
though an application for business credit isn’t required
to be in writing. This requirement for “documentation” that
the bank isn’t “breaking the law” means our bankers
can no longer extend credit to a husband and wife partnerships
(such as many farm operations are) unless both “partners” have
signed documents to verify they seek joint credit. Frankly, this
type of requirement is profoundly irritating to customers and bankers
alike. It does nothing discernable to increase equal credit opportunity,
and only increases paperwork and effort to document compliance.
Adverse Action
Notice Requirements. The rules that trigger a requirement for an
adverse action notice should be simplified and made clearer, particularly
regarding a bank’s effort to offer a customer a loan which
varies from terms requested in the original application. When a
bank issues an adverse action notice when a credit transaction
with the customer remains under consideration, the customer is
confused and frustrated and , to his detriment, may feel driven
to less regulated lenders for service.
Regulation Z, Truth in Lending
Finance Charges/
APR. We urge you to consider every possibility for simplifying
Regulation Z. Bankers can not accurately calculate a finance charge
and APR without a computer program or advanced degree in mathematics
and neither bankers and consumers understand the calculation. The
complexity of Regulation Z and its finance charge/APR calculations
increases errors and makes it less likely that APRs from different
lenders will, in fact, be comparable and useful to consumers who
are “shopping around” for the best terms.
Right of Rescission.
We also believe it is past time to re-evaluate the three-day right
of rescission. Consumers perceive this “right” to impede
their access to loan proceeds and virtually never rescind a covered
transaction within the mandatory waiting period. We recognize that
the right of rescission is in the Truth in Lending Act itself.
However, we urge you to consider whether and how Regulation Z could
be amended to allow customers to make an informed waiver of their
right to rescission.
Home Mortgage
Disclosure Act (HMDA) (Federal Reserve Regulation C)
Exemption Thresholds
and Data Collection Requirements. The threshold for subjecting
banks to HMDA data collection requirements should be substantially
increased and all current and future data collection requirements
should be subjected to a stringent cost/benefit analysis. Regulators
must recognize that continued expansions of this type of data required
to be collected and enhanced detail for reporting increase banks’ costs
and costs errors. Since the costs are substantial, the consumer
benefit should be required to be proved, not presumed, and equally
substantial.
FDIC
April 20, 2004
Page 3
We realize neither banks nor regulators have an easy task when it comes to
implementing consumer protection statutes. This task will be made easier
if every regulation is reviewed to make sure it is written in language
that is clear and concise and so that it can be understood by financial
institutions and examiners alike. We also urge an examination of the regulations
for the express purpose of eliminating paper and paperwork. Requirements
for documentation in the form of additional paperwork are out of step with
current technologies and, increasingly, consumer expectations about being
able to complete a whole transaction (from inquiry to consummation) on-line
and without signing any paper.
Finally we suggest
that each agency consider its own experience with each regulation
which is be reviewed at this time. It is the agencies which have
the cumulative data from which to determine particularly troublesome
areas of compliance or each regulation. Bankers want to be in compliance
with all applicable regulations. If there are trouble spots which
occur across a reasonable broad spectrum, then those are areas
which should receive special scrutiny because they must be unclear
and too complicated. We note others are also suggesting the agencies
develop a compendium of regulations and the products to which they
apply. That is a sound suggestion for improvement and one which
we also endorse.
NDBA appreciates
the industry with which the agencies are pursuing this initiative
and urges to be viewed banker comments for changes from the perspective
of the banker who wants 1) to efficiently serve his customers’ financial
needs and, at the same time 2) to comply with the governing laws
and regulations.
Sincerely Yours,
NORTH DAKOTA
BANKERS ASSOCIATION
James Schlosser Marilyn
Foss
Executive Vice President General
Counsel
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