Regulatory Writ to Run
Barsness, Bob, Independent Banker
This year could be the Year of Regulations for community bankers. While the Gramm-Leach-Bliley banking reform law included provisions that significantly reduce the frequency of CRA exams for small banks with satisfactory and outstanding ratings, it will impose new administrative and regulatory burdens on community banks. We will not truly know the extent and severity of these burdens until the regulations are final, banks have implemented them, and examiners have reviewed banks' compliance.
But we need to start thinking about them now. Among other things, the financial reform law imposes new requirements and standards in the area of customer privacy on financial institutions. Unfortunately, the legislation tilts toward the big banks in that it treats sharing of customer information with third parties more restrictively than the sharing of such information with affiliates. The ABA drew its line in the sand on no restrictions in sharing customer information among financial service holding company affiliates.
A key provision of the privacy rules is the "opt-out" requirement, a mandate that all companies offering financial products must give their customers the opportunity to reject the sharing of personal, nonpublic information with certain unrelated third parties.
All community bankers need to take steps in this direction. They also need to follow the privacy issue closely in their state legislatures, which may now enact even stricter privacy regulations under the federal law. …