The
Peoples Bank
From:
Connie & Mark Watts [mailto:wattsnot@sctelcom.net]
Sent: Thursday, July 15, 2004 12:17 AM
To: regs.comments@federalreserve.gov; Comments; regs.comments@occ.treas.gov;
regs.comments@ots.treas.gov
Cc: mark a watts
Subject: EGRPRA
Dear Sirs:
I am writing to you concerning 10 regulations that I feel either
are confusing to the consumer, create a disadvantage to the banking
industry compared to non-bank businesses, or are economically burdensome
to try and comply with the record keeping requirements.
They are:
1. Bank Secrecy Act - Currency Transaction Reports (CTRs) and Suspicious
Activity Reports (SARs): The participants agreed that regulations
enacted pursuant to the Bank Secrecy Act and anti-money laundering
legislation are the most burdensome regulations for the banking community.
First, the cost of compliance is high; second, the regulations are
considered by the bankers to be ineffective; third, the regulations
and exemptions are overly complex; and, fourth, the penalties for
noncompliance, including unintentional errors, are severe.
Banker Suggestions:
• Increase
the threshold for transactions requiring CTRs from $10,000 to
a higher amount.
• Increase the threshold for monetary instruments from $3,000 to a
higher amount.
•
Eliminate annual recertification requirements for the same “exempt” customers
• Increase the threshold for money laundering SARs from $5,000 to a
higher amount.
• Establish a dollar threshold for insider abuse, eliminating SARs
for small dollar theft.
2. USA Patriot Act and "Know Your Customer" Requirements:
The bankers asked if Know Your Customer requirements are truly effective
in combating terrorism.
Banker Suggestions:
• Reconsider
the effectiveness of the customer identification and recordkeeping
requirements of the USA Patriot Act.
•
Provide clear guidance regarding the customer identification
standards such as what is considered an acceptable form of identification?
(The federal banking, thrift, and credit union regulatory agencies,
the Financial Crimes Enforcement Network and the Department
of Treasury
jointly issued interpretive guidance on the application of
the “Customer
Identification Programs for Banks, Savings Associations, and
Credit Unions” regulation on January 9, 2004).
3. Regulation D - Limitations on Transfers from Money Market Deposit
Accounts: The participants reported that the regulation is antiquated
and serves no apparent purpose. Moreover, the restrictions place
banks at a competitive disadvantage with non-banks and credit unions.
Banker Suggestions:
• Remove
restrictions and allow unlimited transfers against money market
accounts.
• Eliminate restrictions on paying interest on certain deposit accounts
(demand deposits and interest-bearing business NOW accounts).
4. Home Mortgage Disclosure Act (HMDA) - Regulation C: The participants
said that the costs of software needed to comply with data collection
and reporting requirements are high yet the data seems to have little
utility.
Banker Suggestions:
• Increase
the asset size threshold for exemption from data collection and
reporting requirements.
• Alternatively, use a different statistic/test for exemption, such
as a market share test or establish a de minimus threshold
tied to mortgage loan origination activity.
• Remove unnecessary data fields and focus on the fields that are truly
meaningful.
5. Community Reinvestment Act (CRA) Regulations: The participants
suggested this regulation is ineffective in an age of internet banking,
national marketing, and niche banks. They also reported that it puts
banks at a competitive disadvantage since non-banks, such as brokers
and credit unions, are not subject to the same regulatory requirements.
Banker Suggestions:
Increase the number of banks not subject to the investment and service
tests. (streamlined test only) by raising the small bank threshold
from $250 million to $1 billion and eliminating consideration of
the holding company. (On January 20, 2004, the Agencies issued a
notice of proposed rulemaking (NPR) regarding the CRA. The NPR proposed,
among other points, amending definition of small bank raising the
total asset threshold from $250 million to that was independent or
an affiliate of a holding company that had total assets of less than
$1 billion to a bank with total assets of less than $500 million,
with no consideration of holding companies).
• Expand
what qualifies for CRA credit under the service test, such as
community service activities.
• Provide additional guidance to banks about ways to meet both the
service and investment tests.
• Explore ways to streamline the approval process for the alternative
CRA examination under which banks may submit a custom
CRA strategic plan subject to public notice requirements.
6. Truth-in-Lending - Right of Rescission: The participants knew
of few, if any, instances when a customer exercised the right of
rescission. Customers are frustrated when they have to wait three
days before receiving their loan proceeds.
Banker Suggestions:
• The
participants recommended that customers be allowed to waive their
right to rescind.
• Alternatively, regulators should incorporate more exemptions or repeal
the requirement for certain categories of transactions
such as refinancings.
7. Extensions of Credit to Insiders and Regulation O: Bankers reported
that some of these restrictions make it difficult to find directors
willing to serve on bank boards.
Banker Suggestions:
• Revise
lending limits upward to state law permissible lending limits.
• Eliminate certain reporting requirements such as:
• A report filed by a bank executive officer with the bank’s
board of directors whenever the executive officer
obtains a loan from another bank in an amount that exceeds the amount the executive
officer could obtain from his or her own bank;
• A quarterly report required from banks regarding any loans the
bank has made to its executive officers since its
previous call report;
• An annual report from a bank’s executive officers and principal
shareholders to the board of directors of any outstanding
loans from a correspondent bank.
• Increase limits on inadvertent overdrafts from the current level
of $1,000.
8. Privacy Notices:
Bankers considered it inefficient and confusing to customers to send
annual, repeat privacy notices when the bank
does not share information in a manner that would trigger a customer’s
right to “opt out” under either the Gramm-Leach-Bliley
Act (GLBA) or the Fair Credit Reporting Act (FCRA). Also, they felt
they should not be required to send annual notices if the privacy
policies had not changed.
Banker Suggestions:
•
Provide an initial notice to customers of bank’s privacy
policy and opt out procedures but then limit subsequent notices
only when
the privacy policy changes in a material way.
9. Truth in Lending (Reg. Z) and, RESPA: Mortgage customers are frustrated
by the volume and complexity of documents they must sign to get a
mortgage.
Banker Suggestions:
•
Bankers told the regulators, “Please write in a manner
to facilitate customer understanding.”
• Simplify APR calculations.
10. Flood Insurance: Bankers reported that investors purchasing commercial
property are well-equipped to determine if they need flood insurance.
Banker Suggestions:
• Exempt
commercial real estate and allow the investors to determine if
they need flood insurance.
• Modify certain coverage requirements: eliminate the requirement for
full coverage at the time of loan closing for
properties under construction; eliminate insurance requirements for low value
collateral taken only
as an abundance of caution, and, reduce the
amount of coverage required to be equal the value of only the property in the
flood zone.
Thank you for your efforts to focus on regulations that enhance consumer
understanding, reduce regulatory burden and level the playing field
for financial businesses viaing for the same dollars available in
the market place.
Sincerely,
Mark A. Watts
Vice President
mwatts@thepeoplesbank.net
The Peoples Bank
PO Box 385
Medicine Lodge, Ks. 67104
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