FDIC Federal Register Citations

From: Ann Van Voorst [mailto:avanvoorst@oceansidebank.com]
Sent: Tuesday, October 12, 2004 2:04 PM
To: Comments
Subject: EGRPRA Burden Reduction Comment; OCC Docket 0418; Fed Docket R-1206; OTS 2004-35

Ann Van Voorst
13799 Beach Blvd.
Jacksonville, FL 32224

October 12, 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banking agencies for their efforts to identify outdated, unnecessary, or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. 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.

Interest on Deposits (Regulations D and Q)

The American Bankers Association (ABA) has asked the FRB to amend its
regulations to create a money market deposit account (MMDA) that would
allow up to twenty-four transactions a month for commercial entities not
eligible for NOW accounts. The FRB declined, claiming that an MMDA that
provided for twenty-four transactions instead of the current limit of six
transactions would effectively circumvent the statutory prohibition
against the payment of interest on demand deposits.
The regional trade association has now asked the FDIC to authorize an
MMDA that allows twenty-four transactions per month and to encourage the
FRB to do the same. The regulatory requirement to monitor and notify those
customers whose transactions exceed six is burdensome and often times
results in a loss of business for banks. The ABA states that such an MMDA
is necessary because banks are at a competitive disadvantage with
brokerage firms and credit unions, which are able to offer their business
customers interest-bearing accounts with unlimited checking.
The FDIC has stated that the most appropriate way to address this issue
is through a statutory change.

Thank you for the opportunity to comment.

Sincerely,

Ann Van Voorst, Oceanside Bank