Constructive Comment Letters Can Ease Regulatory Burden

Article excerpt

Over the last several years banks have experienced a significant increase in the number of regulations impacting their activities, resulting from numerous new laws enacted by Congress. The FDIC Improvement Act of 1991 (FDICIA), the most recent example, may well imposed 40 or more new regulations on banks.

Over the next several months, bankers can expect to see numerous regulations proposed for public comment by the banking agencies as a result of FDICIA. Indeed, the agencies have already issued several regulations, including rules relating to assessments for national banks; brokered deposits; and insider lending. Other federal bodies, such as the Environmental Protection Agency and the Architectural and Transportation Barriers Compliance Board, also issue regulations that affect banks.

Bankers may successfully influence agency rulemaking by implementing the following suggestions.

(1) Seek to provide comment to federal agencies on all proposed regulations.

Bankers can, and should, play a role in the drafting of regulations. It is from bankers and their representatives that the agencies learn how a proposed regulation will affect the industry.

In most cases, federal agencies are required by law to provide interested persons an opportunity to participate in rulemaking through the submission of written comments. Notice is always given by a federal agency of an opportunity to comment, and it's usually published in the Federal Register. Bankers who don't subscribe to that can learn of proposed regulations in other ways. Banking agencies mail copies to banks they supervise. Other federal agency proposals can be found through trade associations and the media.

(2) Don't just complain.

In writing comments, bankers should focus on the proposal rather than oppose the law that requires the regulation. For example, in commenting on a proposed regulation implementing the Community Reinvestment Act, it is not effective to argue that CRA should be repealed. That complaint is best directed at Congress.

Nor is it effective to merely oppose a regulation. Bankers who do this may blow off steam, but they fail to provide any meaningful information to the agency that may be used in producing an improved final regulation.

Bankers should cite specific examples to support their views. Is a new reporting burden created? Are new costs of compliance created? Does a bank have easy access to data required by a proposal? How will a proposal impact bank operations? How will a proposal affect customers? Will a proposal put a bank at a disadvantage against nonbanks?

If bankers are unable to comment on all aspects of a proposal, they may still comment on one or two issues.

Industry comments influenced a proposed regulation on appraisal standards for federally related real estate transactions. In August 1991, OCC issued a proposed rule to raise the threshold transaction level at which an appraisal by a state-certified or licensed appraiser would be required to $100,000 from $50,000.

More than 500 banker letters supported the increase. Many letters gave specific examples of how the proposal would cut consumer and bank costs without affecting safety and soundness. In April 1992, OCC adopted a final rule increasing the de minimis threshold to $100,000.

(3) Pay attention to details.

First, send comments to the person listed in the proposal, and include the appropriate reference name or docket number. …