Based on Your Assessment of the Current Proposals, How Would Rate-Risk Regulation Affect Your Bank and the Industry?

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The first comment period on proposed reporting and capital requirements for interest-rate risk recently concluded, with multitudes of responses flooding into Washington. Under consideration is a controversial reporting format that purports to show how changes in interest rates would affect the net worth of an institution. Risk-based capital requirements would be based on the model. American Banker's Chicago bureau chief, Steve Klinkerman, asked community bankers: Q Based on your assessment Of the current proposals, how would rate-risk regulations affect your bank and the industry? * Richard Tucker Sr. Chairman and chief executive Tri-State Bank, Denver

We probably can manage the reporting requirements. But what bothers me is the loss of flexibility in balance sheet management. Will we be as willing to make that seven-year church building loan, knowing we might have to back it with additional capital if rates change in the interim before maturity?

The answer is, we often will waver. Delays in making credit decisions probably will. affect our customer base. I suspect this scenario will play out at most community banks; the aggregate result will be a further constraint on the supply of credit. * Ronald Fenton President Security Bank, Marshalltown, Iowa

I am hopeful that the rules will be moderated, and that there will be a lesser impact than what some bankers fear.

Like many Midwest community banks, our capital exceeds regulatory requirements substantially. Increased reporting and record-keeping requirements won't increase the already high levels of safety and soundness that banks such as ours maintain.

Although regulators are obliged to carry out the dictates of the 1991 banking law, they still have some discretion.

And from what I hear, they are realizing there's a universe of sound banks that could better spend reporting time and resources building profits and serving customers. …