Federal Register Citations National Penn Bank
SUBJECT: EGRPRA Comments regarding
reduction of regulatory burden
DATE: May 4, 2005
Dear Sir or Madam:
Thank you for the opportunity to comment on
those regulations where we feel changes are necessary, either due
to outdated regulations or where it just doesnt make sense or
serve any realistic purpose.
National Penn Bank is a subsidiary of National
Penn Bancshares, Inc. a $4.5 Billion holding company located in
southeast Pennsylvania and Maryland. Here is our list for
1. CTR Reporting Threshold should be increased.
The $10,000 threshold has been around since the
late 1970s and has not had a cost of living or a time value
adjustment since its inception. The resources for monitoring and
tracking this are ever increasing as our company grows in size. We
suggest a value of $25,000 to $30,000 for monitoring. While we
understand and appreciate the value of monitoring for BSA and AML
issues, this threshold appears to be too low, and it clutters up
the system with too much information, allowing the meaningful
information to potentially slip by.
2. Monitoring of Money Service Businesses for
The time and cost associated with monitoring
Money Service Businesses is prohibitive. Many of the larger banks
have started charging fees and or have gotten out of the business
entirely. Many MSBs in our area service a small remote community
and play a part in that community as convenience stores, small
specialty shops small grocery stores and the like. To discontinue
business with them is doing a disservice to that community. Yet,
we the bank bear the cost of monitoring that business. While our
staff is very good at identifying risks, they are not regulators,
and could miss something. I agree those large commercial check
cashers, payday lenders and the like pose a greater risk for us
than the smaller Mom and Pop shops. We are glad that FinCen
defined this, however because it is such a hot topic, feel that it
is not as easy as black and white.
3. Annual Privacy Notices GLBA.
I consider customer privacy the backbone of the
banking industry; however, there are some changes that should be
made to this regulation. The annual privacy notice that banks are
required to send to their customers is costly and quite frankly
confusing to a lot of our consumers. While the regulation gives
model disclosures, which we use, most consumers want something
that is in simple and easy to understand in plain English, not
I believe there should be an exemption that we should not have to
re-send the notice every year. After all, we give them out for new
accounts, upon request and have it displayed on our web-site. Many
consumers tell us dont send us that junk mail at the time we
mail the privacy notices and of course, we have to pay someone to
tell them that junk mail is our privacy notice and what it
means. This all increases the cost.
4. Regulation D Limitations on Transfers from
Money Market Deposit Accounts.
In todays world, this is probably the most
antiquated rule remaining. Even though we have this disclosure in
our Deposit Agreements and tell consumers about it, they forget
and make multiple transfers over the limits, thereby generating a
notice and possible closing of their account. I understand that
the initial purpose of a MMD account was a savings account, and
thus in order to get interest, the limits were placed on it,
however it is extra monitoring and explaining to consumers that
could and should be avoided.
5. Regulation E Electronic Funds Transfers.
One area where common sense seems to play little
part is the consumer liability area for unauthorized transactions,
particularly when a consumer writes their PIN (Personal
Identification Number) right on the card. In my mind the consumer
plays some role in making sure they are protecting their funds and
their account. I believe the liability should be increased from
$50 to $500 for either the second or third incident of this type
of unauthorized transaction. After all, why should the bank, who
tells the consumer to protect their PIN eat this cost. Many times
it is the repeat offenders who are not playing fair.
6. Home Mortgage Disclosure Act (HMDA).
The costs of software and monitoring needed to
comply with data collection and reporting requirements seems to
fall short of fulfilling its purpose of monitoring discrimination.
I would suggest that we remove unnecessary data fields and focus
on the fields that are truly meaningful, or possibly use market
share to determine whether a bank is fulfilling its obligations.
7. Flood Insurance.
One of the issues that repeatedly comes up in
our company is flood insurance, particularly on high value loans
and high value properties. While I understand the FEMA limits, and
requirements consumers who have not previously had mortgages often
feel that we are being unreasonable in requiring Flood Insurance.
This sometimes happens when another institution does not require
flood, but should have, or the borrower has never had a bank loan.
In addition when a shoreline property is very high value, often
times lenders and consumers complain that a $250,000 limit on a
property that is worth $2.5 Million is ridiculous, because the
$250,000 is not near enough. There is very little leeway built
into the flood guidelines, particularly if a bank is making a loan
on credit or character, and the property is an abundance of
An additional item concerning Flood is the
Notice of Flood Insurance Form. The requirement states that the
form must be provided to the borrower in a reasonable time before
settlement. When you have loans that close in a short period of
time, it seems like an unnecessary form when we already have proof
of flood insurance before the loan settlement.
8. FACT Act Credit Score Disclosure.
This new disclosure seems to confuse borrowers
more than anything, particularly the part that specifies key
factors. The Key Factors are determined by the Credit Reporting
Agency, but since the bank is the one required to send the
disclosure, the consumer automatically thinks the bank can either
change this or explain it in detail. I agree with the intent and
purpose of the FACT Act, to fight identity theft, but the
disclosure is only required on consumer purpose, real estate
secured loans. It would seem that if we made a car loan, or an
unsecured loan or line, and pulled a credit report that it should
apply equally, since identity theft doesnt only occur on real
estate secured transactions. It would make more sense for the
credit disclosure to print at the bottom of the credit report and
all inquiries to be made to the credit reporting agency, rather
than the bank.
9. Time Line for Regulatory Compliance.
Many of the recent regulations had very short
time lines for implementation: CIP and the USA Patriot Act, Check
21, the FACT Act to name a few. Three to six months of
implementation time is insufficient when we all still have the
business of every day banking to contend with. In our company many
of these would involve systems, forms, disclosures, training and
the like for the holding company as well as the affiliates. Plus,
recently we were going through several acquisitions, making this
short timeline a challenge for sure!
Thank you for consideration of our viewpoints.
Debra A. Wetzel, MBA, CIA, CRCM, CRP
Vice President & Bank Compliance Manager
National Penn Bancshares, Inc. (National Penn Bank)
Philadelphia & Reading Avenues
Boyertown, PA 19512