Virginia Bankers Association
April 20, 2004
Public
Information Room
Office of the Comptroller of the Currency
250 E Street, SW
Mailstop 1-5
Washington, DC 20219
Ms. Jennifer J. Johnson, Secretary
Board of Governors of the Federal
Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551
Robert E. Feldman, Executive Secretary
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
170 G Street, NW
Washington, DC 20552
Regulation Comments
Chief Counsel’s Office
Office of Thrift Supervision
170 G Street, NW
Washington, DC 20552
Re: OCC, Docket Number 04-05;
FRB, Docket Number R-1180;
FDIC, EGRPRA Burden Reduction Comment;
OTS, No. 200367
Dear Sir or Madam:
I am writing on behalf
of the Virginia Bankers Association (“VBA”)
in response to the agencies request for comment on the regulatory
burden review related to consumer lending. The VBA represents approximately
140 commercial banks and thrifts doing business in the Commonwealth
of Virginia. Our members include many small banks serving local communities
in the Commonwealth, as well as several large banks with a regional
or nationwide presence.
In general, we believe it is important for the agencies to appreciate
the magnitude of the overall regulatory burden on banks. Not only
must banks comply with a host of banking agency regulations, they
also must comply with a number of other regulations and legal requirements,
such as, RESPA regulations, Fair Credit Reporting Act requirements,
and many other federal and state requirements.
We also would point out
that modifications in existing regulations – however
slight they may appear on paper – can create significant costs
for banks. For example, changes to a required disclosure can mean
redesigning existing documents, software, advertising, website, etc.
Also, we emphasize that many of the fiercest competitors of banks are not subject
to the same level regulatory burden. Credit unions, for example, are not subject
to the Community Reinvestment Act. Thus, not only does the regulatory burden
negatively impact banks in terms of sheer cost, it also hurts them relative
to their competitors.
We raise these general
points because we believe it’s critical
that the banking agencies do all in their power to reduce the overall
regulatory burden on banks. In particular, we believe the banking
agencies should be more proactive before Congress in advocating reductions
in the regulatory burden on banks.
With regard to specific issues, we have the following comments.
First, we would urge the agencies to recommend to Congress eliminating
the right of rescission under the Truth in Lending Act. The right
of rescission is difficult for consumers to understand, adds a great
deal of paper to the settlement process and the time it takes for
the consumer to close the transaction, and is rarely used. In short,
the costs associated with the right of rescission far outweigh any
benefits. Inasmuch as the right of rescission is not serving any
legitimate needs, as originally envisioned by Congress, it should
be eliminated so as to eliminate time and expense in connection with
settlements.
Second, the Federal Reserve Board should clarify recent amendments
to Regulation B and its Commentary involving joint applications.
While the Board stated that written applications are unnecessary
(except where otherwise required), that creditors have flexibility
in documenting the intent to apply jointly, and that model forms
are optional, many banks are concluding that these changes require
written applications and that the language added to the model forms
is mandatory. The Board should clarify that the regulations are optional.
Retaining current forms with the new language would reinforce the
concept of flexibility and choice. The Board should also work with
other regulators to ensure the regulations are interpreted consistently.
Third, under Regulation Z, we believe the Federal Reserve Board should permit
the unsolicited issuance of additional credit cards on an existing account
outside of renewal or the substitution of cards. The current rule limiting
the ability of issuers to issue additional cards or other access devices limits
the ability of issuers to offer products that consumers want. Technological
advances have improved the ability of issuers to protect consumers from fraud
when they hold multiple cards or access devices.
Fourth, we believe the Federal Reserve Board should clarify an issue relative
to refinancings under the Home Mortgage Disclosure Act (“HMDA”)
regulation. Based on a change in the definition of refinancing under the HMDA
regulation, many banks are reporting a number of small business loans as HMDA
loans. There is considerable confusion in the industry as to whether these
loans will also be reported as CRA Small Business loans or whether having been
reported as HMDA loans they are no longer reportable as CRA loans.
In conclusion, we appreciate the federal banking agencies seeking
regulatory burden reduction recommendations from the banking industry.
Again, we believe the agencies should do all they can to reduce the
enormous regulatory strain facing banks.
Sincerely,
Walter C. Ayers
Executive Vice President
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