Recommendations for Legislative Action
Community Reinvestment Act
- Require bank regulators to apply streamlined CRA examinations to banks with up to $2 billion in assets (increase from current $250 million), with inflation adjustment.
Truth in Lending (Federal Reserve Regulation Z)
- To improve customer service, repeal the three-day right of rescission or give regularly examined depository institutions greater latitude to allow customers to waive the right, so they can receive their funds in a more timely manner.
- Eliminate the right of rescission for refinancing in which the lender holds the existing lien, refinancing with a new lender where no new money is advanced, and home equity lines of credit.
- Simplify and relax, or eliminate existing restrictions on what may be included and what must be included in advertisements if a certain trigger term is used.
- Simplify the definition of the finance charge so that all consumers can understand the Annual Percentage Rate.
- Synchronize and coordinate early Truth in Lending the RESPA disclosures. Timing of disclosures should allow consumers to make informed decisions. Disclosures should focus on the information consumers want most: the principal amount of the loan, the simple interest rate on the promissory note, the amount of the monthly payment and the costs to close the loan.
- Expand timeframes for resolution of billing errors to allow banks to investigate and resolve errors and avoid fraud. Increase penalties for frivolous error claims.
- Provide a de minimis level of $50 for which no restitution need be ordered for inadvertent errors. Allow flexibility so banks do not have to review large numbers of consumer files for inadvertent errors and possibly make restitution of nominal amounts where the costs far outweigh the minimal benefits to the individual consumer.
Home Mortgage Disclosure Act (HMDA) (Federal Reserve Regulation C)
- To recognize changing industry demographics, increase the asset threshold for the HMDA exemption from $33 million to at least $250 million, with inflation adjustment.
- Exempt banks that make fewer than 100 reportable loans per year per category.
- Allow the banking agencies to develop a definition of Metropolitan Statistical Area that applies to banks, instead of using Census Bureau definition created for entirely different reasons, to avoid covering certain rural banks.
- Limit reporting to purchase money mortgages and refinancing of such mortgages.
- Direct the Federal Reserve to streamline HMDA data collection and reporting and eliminate requirements that are not cost-justified. The volume of data that the Federal Reserve requires to be collected and reported under HMDA continues to grow and has been identified by bankers as one of the top ten regulatory burdens.
Bank Secrecy Act (BSA,) USA Patriot Act, Anti-Money Laundering (AML) Compliance
- Increase the threshold for filing a Currency Transaction Report from $10,000 to $30,000, and adjust it for inflation. Increase other reporting thresholds as well.
- Allow banks filing fewer than 50 CTRs a month to file quarterly.
- Expand ability for banks to exempt from CTR filings certain regular, known customers and eliminate annual recertification for exempt customers.
- Change record retention requirement under USA Patriot Act for closed accounts from five to two years.
- Streamline and simplify flood insurance requirements.
- Allow exceptions to flood insurance requirements for agricultural real estate where the value of most of the collateral is represented by land, not permanent structures.
- Allow banks that do not share information other than pursuant to the processing or service provider exceptions to provide a short statement to that effect printed on the customer's bank statement.
Call Report Streamlining
- Direct the agencies to streamline the Call Report and to conduct, in consultation with the industry, a review of Call Report requirements to determine (a) which data requirements are necessary for the agencies to carry out their supervisory responsibilities, (b) what information can be removed from the Call Report, (c) whether reporting can be reduced to once or twice a year for small highly-rated, well-capitalized banks and (d) if there is an easier method for the banks to retrieve and prepare the information and send it to the agencies in a format most compatible with existing bank data processing systems.
- Exempt banks with less than $10 billion in assets from internal control attestation and audit requirement, since banks with assets of more than $500 million are already subject to FDICIA attestation and audit requirements and are heavily supervised by bank regulators.
- Establish additional exemption levels under other sections of the Act for small banks/bank holding companies.
Credit to Insiders (Federal Reserve Regulation O)
- Direct agencies to expand overly restrictive executive officer borrowing authority, for example, by increasing dollar amounts officers may borrow for personal residence and children's education and for "other purpose."
- Repeal aggregate limit on loans to insiders or set in statute a two-times-capital aggregate limit for banks under $1 billion.
- Delete the requirement that loans to executive officers must become due and payable on demand.
- Streamline and reduce certain reporting requirements regarding loans to executive officers and loans from correspondent banks to executive officers and shareholders.
- Give federal regulators more flexibility to determine the examination interval for well-rated, well-capitalized banks with less than $1 billion in assets.
Money Market Deposit Accounts (Federal Reserve Regulation D)
- Expand the number of permissible transfers from money market deposit accounts from 6 to 24 per month.
Expedited Funds Availability (Federal Reserve Regulation CC)
- Streamline and simplify the complex, operationally challenging requirements.
Electronic Funds Transfer Act
- Increase consumer liability from $50 to $500 for unauthorized transactions resulting from writing PIN on card or keeping PIN in the same location as the card.
- Extend notification requirement for a change in account terms or conditions contained in the initial Regulation E disclosure from 21 days to 30 days, consistent with Regulation DD.
Bank Holding Companies (Federal Reserve Regulation Y)
- Direct the Federal Reserve to increase the size limit for banks eligible for the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors from $150 million to $1 billion. To qualify the holding company must (1) not be engaged in any non-banking activities involving significant leverage and (2) not have a significant amount of outstanding debt that is held by the general public.
- In an effort to further streamline certain bank holding company notices and applications, increase the size threshold for streamlined application and information requirements from $150 million threshold to $1 billion.
- Eliminate dividend restriction requirements for banks that are well-capitalized and will continue to be well-capitalized following the declaration of the dividend.
- Eliminate the newspaper publication requirement and eliminate the requirement to file a branch application for "eligible banks" (e.g., those with high CAMEL ratings and satisfactory CRA ratings and compliance ratings), if the branch that is acquired is less than a certain percentage of the total consolidated asset value of the bank or less than a certain dollar amount. Branch applications filed with the Federal Reserve or FDIC are often duplications of applications filed with the state banking authorities.
- Exempt ATMs, branch acquisitions in the acquirer's service area, branches moved in the same local market, and branches closed due to emergency acquisition or FDIC assistance.
- Provide community banks with the same protection afforded other investors and other depository institutions for their brokerage account assets when a broker dealer fails.
- Amend the reporting requirements under the Government Securities Act so that banks don't need to send a statement whenever money is swept from a deposit account into a government repurchase agreement.