FDIC's Plans to Review Existing Regulations for Continued Effectiveness
On July 11, 2011, the President issued Executive Order 13579, "Regulation and Independent Regulatory Agencies". The FDIC has a long-standing policy and practice of reviewing its proposed and existing regulations to evaluate their impact. Following is an overview of the FDIC's plans to review existing regulations for effectiveness.
FDIC's Statement of Policy on Rulemaking
The FDIC has a longstanding policy of implementing its regulations in the least-burdensome manner possible, in accordance with the FDIC Statement of Policy on the Development and Review of FDIC Regulations and Policies, 63 Fed. Reg. 25,157 (1998). That Statement of Policy recognizes the FDIC's commitment to minimizing regulatory burdens on the public and the banking industry and the need to ensure that FDIC regulations and policies achieve regulatory goals effectively. The Statement of Policy also provides that the FDIC will periodically review its regulations and statements of policy to ensure that they are current, effective, efficient, and continue to meet principles of the Statement of Policy. The FDIC will be undertaking a review of the 1998 Statement of Policy itself to determine how it should be revised to incorporate additional principles regarding cost-benefit analysis, and otherwise to serve the purpose of reducing regulatory burden.
In addition to this longstanding policy, the FDIC will be undertaking a number of initiatives to review its existing rulemaking process.
Review and Update Rules Affected by the Dodd-Frank Act
As part of its implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), the FDIC is also engaged in an ongoing review of its rules affected by the Dodd-Frank Act. We are updating, streamlining, or rescinding some of our rules to comply with and conform to the Act. We are also working to establish clear rules that will ensure a stable financial system and impose minimum regulatory burden. In all Dodd-Frank Act rulemakings, we have been coordinating our efforts closely with the other financial regulators to ensure consistency and avoid duplication of efforts. We also invite public participation in each phase of the rulemaking process. The FDIC plans to continue those efforts.
Evaluation of Examinations and Rulemakings Affecting Community Banks
The FDIC is undertaking a community bank initiative in which the FDIC will review both its examination process and rulemaking process to further our understanding of the challenges and opportunities for community banks. We plan to hold a conference early in 2012 on the future of community banking and are tracing the evolution of community banks over the past 20 years, including changes in business models and cost structures, so that we can suggest lessons to be learned. The FDIC is also reviewing key challenges facing community banks, such as raising capital, keeping up with technology, attracting qualified personnel, and meeting regulatory obligations. Additionally, we are evaluating our own risk-management and compliance supervision practices to see if there are ways to make the process more efficient. We will continue to have direct outreach and an open dialogue by holding a series of regional roundtables with community bankers across the country to get their input on these and other matters. The FDIC will further this dialogue through public meetings of our Advisory Committee on Community Banking, a forum where we hear firsthand from a broad cross-section of community bankers about both the challenges and the opportunities they see in their markets, as well as some of the concerns they have about the regulatory environment. This overall effort in regard to community banks will be a major priority for the FDIC during 2012.
Streamlining and Transparency
The FDIC has already taken steps to reduce burden and increase transparency in rulemaking. In response to input from members of the FDIC's Advisory Committee on Community Banking on ways to reduce regulatory burden, we conducted a review during 2011 of the questionnaires and reports that banks file with us and made changes to streamline the filing process through greater use of technology and automation. Also, to make it easier for smaller institutions to understand the impact of new regulatory changes or guidance, we specifically added a statement up front in our Financial Institution Letters (the vehicle used to alert banks to any regulatory changes or guidance) as to whether the change applies to institutions under $1 billion.
The FDIC has also put in place a number of measures to promote transparency in our rulemaking process, including holding public roundtable discussions on Dodd-Frank implementation issues via webcast; releasing the names and affiliations of private sector individuals who meet with senior FDIC officials to discuss matters subject to rulemaking under the Dodd-Frank Act; establishing a dedicated mailbox to collect and post on the FDIC's website input from the public; and hosting a dedicated webpage that provides information on the Dodd-Frank Act implementation process at the FDIC.
Continued Analysis of the Costs and Benefits of Rulemaking
In its general rulemaking process, the FDIC continually focuses on the potential costs and benefits of the rules that it adopts. A number of statutes help ensure that regulatory agencies consider and minimize regulatory burdens. For example, under the Regulatory Flexibility Act, the Riegle Community Development and Regulatory Improvement Act, and the Small Business Regulatory Enforcement Fairness Act, the FDIC must analyze a proposed rule's impact on depository institutions, customers of depository institutions, small depository institutions, and industry competition. The FDIC considers the effect of its regulations on competition within the industry and specifically analyzes effects on banks and their ability to raise capital. These analyses are an important way in which the FDIC strives to ensure that its rules meet statutory rulewriting requirements in the most efficient manner possible.
Many of the FDIC's regulations are required by statute and/or are aimed at protecting the Deposit Insurance Fund. It is the FDIC's longstanding policy to ensure that the rules it adopts are the least burdensome to achieve those goals. The FDIC's Statement of Policy recognizes our commitment to minimizing regulatory burdens on the public and the banking industry and the need to ensure that our regulations and policies achieve regulatory goals effectively.
A recent Inspector General's report (which can be found online at: http://fdicig.gov/reports11/11-003EV.pdf) (PDF Help) examined three FDIC rulemaking projects. The Inspector General's findings confirmed that the FDIC staff worked with other financial regulatory agencies to ensure a coordinated rulemaking effort; performed quantitative analysis of relevant data; considered alternative approaches to the rules; and, where applicable, included information about the analysis that was conducted and assumptions that were used in the text of the proposed rule. The report also found that each of the proposed rules examined by the Inspector General was considered by the FDIC Board of Directors in open, public meetings.
Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA)
Finally and importantly, the FDIC will be undertaking a comprehensive review of its regulations in order to identify any outdated, unnecessary or unduly burdensome regulations pursuant to the EGRPRA. This well-established process requires the FDIC to conduct a complete review of all its regulations at least every ten years. The FDIC completed its last review under EGRPRA in 2006 and must complete its next comprehensive review by the year 2016. In order to prepare for the upcoming EGRPRA review process, the FDIC will publish for public comment in early 2012 a plan outlining the process for the FDIC's next comprehensive review of its rules.