Magazine article American Banker

Regulators Call for Simpler Capital Rules, Easier Reporting Standards

Magazine article American Banker

Regulators Call for Simpler Capital Rules, Easier Reporting Standards

Article excerpt

Byline: John Heltman

WASHINGTON -- Banking regulators are calling for a raft of regulatory changes, including streamlining capital, reporting and appraisal rules in order to reduce compliance burden.

The agencies detailed their recommendations Tuesday in a report under the Economic Growth and Regulatory Paperwork Reduction Act, which requires regulators to identify outdated or redundant regulations every ten years that can be updated or discarded.

Federal Reserve Board Gov. Daniel Tarullo, the agency's point person on regulatory matters, reiterated in a letter to lawmakers that regulatory burden should be borne proportionately to a bank's size and risk to the financial system. That concept can be further extended to regulators' supervisory approaches to small banks, he said.

"While EGRPRA focuses on how to reduce the burden of regulations promulgated by the agencies, I believe there is need for a complementary effort to streamline the supervision of community banks," Tarullo said. "I have asked the FFIEC to undertake a project along these lines. I hope and expect that it can result in significantly more efficient examination processes that will reduce compliance costs for community banks without compromising safety and soundness and other statutory goals."

The report, which was issued by the Federal Financial Institutions Examination Council, outlines several areas that warrant further examination and regulatory change, centered in broad categories.

With respect to capital requirements--particularly those related to commercial real estate loans -- the regulators said further investigation is needed to clarify which CRE loans are considered "high volatility" and which are not -- a designation that means the difference between carrying a 100% capital risk weight and a 150% capital risk weight. …

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