Public Comment EGRPRA Americas Community Bankers

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Public Comment EGRPRA Americas Community Bankers

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April 4, 2006 Ms. Jennifer J. Johnson Regulation Comments Secretary Chief Counsel’s Office Board of Governors Office of Thrift Supervision Federal Reserve System 1700 G Street, NW th20 Street and Constitution Avenue, N.W. Washington, DC 20552 Washington, DC 20551 Docket No. 2005-53 Docket No. R-1243 Mr. Robert E. Feldman Office of the Comptroller of the Currency Executive Secretary 250 E Street, S.W. Federal Deposit Insurance Corporation Washington, DC 20219 th550 17 Street, N.W. Docket No. 05-22 Washington, DC 20429 Re: Request for Burden Reduction Recommendations; Rules Relating to Prompt Corrective Action and the Disclosure and Reporting of CRA-Related Agreements; Economic Growth and Regulatory Paperwork Reduction Act of 1996 Review 70 Fed. Reg. 287 (January 4, 2006) Dear Sir or Madam: 1America’s Community Bankers (ACB) is pleased to comment on the federal banking 2agencies’ (the Agencies) review of regulatory burden imposed on insured depository institutions. Required by section 2222 of the Economic Growth and Regulatory 3Paperwork Reduction Act of 1996 (EGRPRA), the agencies are reviewing and identifying outdated, unnecessary and unduly burdensome regulatory requirements. This comment letter responds to the request for comments on rules relating to prompt corrective action (PCA) and the disclosure and reporting of CRA-related agreements. 1 America’s Community Bankers is the national trade association partner for community banks that pursue ...

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Extrait

April 4, 2006

Ms. Jennifer J. Johnson

Secretary

Board of Governors

Federal Reserve System

Street and Constitution Avenue, N.W.

Washington, DC 20551

Docket No. R-1243

Regulation Comments

Chief Counsel’s Office

Office of Thrift Supervision

1700 G Street, NW

Washington, DC 20552

Docket No. 2005-53

Mr. Robert E. Feldman

Executive Secretary

Federal Deposit Insurance Corporation

550 17

Street, N.W.

Washington, DC 20429

Office of the Comptroller of the Currency

250 E Street, S.W.

Washington, DC 20219

Docket No. 05-22

Re:

Request for Burden Reduction Recommendations; Rules Relating to Prompt

Corrective Action and the Disclosure and Reporting of CRA-Related Agreements;

Economic Growth and Regulatory Paperwork Reduction Act of 1996 Review 70

Fed. Reg. 287 (January 4, 2006)

Dear Sir or Madam:

America’s Community Bankers (ACB)

is pleased to comment on the federal banking

agencies’ (the Agencies)

review of regulatory burden imposed on insured depository

institutions. Required by section 2222 of the Economic Growth and Regulatory

Paperwork Reduction Act of 1996 (EGRPRA),

the agencies are reviewing and

identifying outdated, unnecessary and unduly burdensome regulatory requirements.

This

comment letter responds to the request for comments on rules relating to prompt

corrective action (PCA) and the disclosure and reporting of CRA-related agreements.

America’s Community Bankers is the national trade association partner for community banks that pursue

progressive, entrepreneurial and service-oriented strategies to benefit their customers and communities.

learn more about ACB, visit

www.AmericasCommunityBankers.com

Federal Deposit Insurance Corporation (FDIC), the Board of Governors of the Federal Reserve System

(Federal Reserve), Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision

(OTS).

Pub. L. 104-208, September 30, 1996.

Request for Burden Reduction Recommendations

April 4, 2006

Page 2

ACB Position

ACB strongly supports the interagency effort to reduce regulatory burden.

ACB believes

that effective regulation is an important element of our banking system.

However, the

burden imposed by outdated and unnecessary rules precludes community banks from

reaching their full potential as financial service providers.

Our comments and

suggestions below reflect the need to ensure that community banks are able to remain

competitive and provide products and services that are relevant in today’s marketplace.

At this time, ACB does not have any recommendations regarding the possibility of

achieving burden reduction through revision of the PCA regime established by Congress

and the Agencies’ implementing regulations. These provisions generally are used by

regulators when an institution is experiencing capital or enforcement issues.

Upon

completion of the Basel capital process, we note that it may be necessary for legislative

or regulatory changes to align the PCA regime with the final capital standards.

ACB believes that the CRA disclosure and reporting requirements contained in section

711 of the Gramm-Leach-Bliley Act (GLB) should be repealed by Congress.

Under

section 711, parties to certain CRA-related agreements must make the agreements

available to the public and to the appropriate federal banking agency. While ACB

supports the intent of CRA, we do not believe that section 711 of GLB furthers the

purposes of the CRA. Section 711 adds an additional layer of complexity to the already

daunting challenge of complying with CRA requirements. The CRA reporting and

disclosure requirements impose significant paperwork, regulatory and cost burdens on

banks that far outweigh any benefits.

Community banks, especially small and mid-sized

banks, are forced to spend considerable resources complying with the disclosure,

reporting and recordkeeping requirements of section 711.

Moreover, the CRA reporting

requirement increases regulatory burden on the federal banking agencies as well as

consumer groups.

This law does not further the interests of communities; instead, it results in wasted

resources for that could be better deployed to serving the affordable credit and financial

services needs of communities. This law discourages fewer creative and innovative

partnerships in the community because of competitive and privacy concerns.

The irony

of the regulation is the better that an insured institution is at forging partnerships or

arrangements with nongovernmental entities or persons in furtherance of CRA, the more

significantly it is burdened. OTS Director John Reich noted in testimony before the

Senate Banking Committee that removing the CRA reporting requirement contained in

section 711 of GLB would “reduce regulatory burden on depository institutions,

nongovernmental entities (i.e., consumer groups) and other parties to covered

agreements, as well as the Federal banking agencies.

There are no safety and

soundness concerns about the repeal of this law

.”

Statement of John M. Reich, Vice Chairman, Federal Deposit Insurance Corporation on Consideration of

Regulatory Reform Proposals, June 22, 2004. (Emphasis added)

Request for Burden Reduction Recommendations

April 4, 2006

Page 3

Short of Congressional repeal of the law, ACB strongly urges the agencies to completely

overhaul the regulations implementing section 711 of GLB.

The implementing

regulations are overly broad and contribute significantly to the regulatory burden and

costs associated with complying with the statutory provisions. Community banks believe

that the entire regime should be greatly simplified and designed to minimize regulatory

burden. This would be consistent with both the statute and its Conference Report, which

require that the Agencies ensure that the regulations prescribed do not impose any undue

burden on the parties and that proprietary and confidential information is protected.

In particular, the terms that trigger a disclosure under the definitions contained in statute

should be narrowly defined. For example, an “agreement” should be defined as a binding

contract between the parties.

The triggering factor for most potentially covered agreements is the determination of

whether the agreement is with a non-governmental entity or person that has had a “CRA

communication” with the insured institution. ACB believes that a nongovernmental entity

or person should have commented or testified or discussed or otherwise contacted an

institution or affiliate about providing or refraining from providing comments or

testimony to a federal banking agency or comments for a public file about such

performance for a “CRA communication” to be initiated.

The current regulations result

in subjective judgments being made about whether a “CRA communication” has

occurred because the definitions are not clear.

This results in inconsistent application and

compliance.

The regulations should enable the parties to make more objective decisions

about whether the reporting requirement has been triggered.

ACB also believes that the Agencies should carefully review the exemptions available

under the statute and interpret those exemptions broadly in a way that achieves the

objective of the law while minimizing regulatory burden.

ACB appreciates the opportunity to comment on this important matter.

If you have any

questions, please contact Patricia Milon at (202) 857-3121 or

pmilon@acbankers.org

Sincerely,

Patricia A. Milon

Chief Legal Officer and Senior Vice President,

Regulatory Affairs

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