Five financial regulatory agencies kicked off a regulatory burden reduction project this week by announcing a plan to review all federal banking regulations to identify and eliminate those that are outdated, unnecessary or unduly burdensome.
Required by a 1996 law to review bank regulations every ten years, the agencies said the three-year effort would systematically review and seek industry comments on different groups of regulations every six months. The agencies would periodically report to Congress on administrative and legislative changes that would reduce burden. "I don't have any illusions about the difficulty of this project," said FDIC vice chairman John Reich, who is chairing the interagency task force. This will be a tough job. It will not be easy, but it will still be worth the effort. We are serious about this effort, we are committed to it, and we intend to achieve results."
Comptroller Jerry Hawke interjected a note of caution in supporting the effort. "I think there is a danger in raising expectations too high," Hawke said. He noted that much of the rule-writing undertaken by the agencies is dictated by Congress, and legislative changes would be needed to change these requirements.
The agencies have grouped 129 regulations into twelve categories. Every six months, the agencies will release several categories for a 90-day comment period. First up will be applications and reporting, powers and activities, and international operations.
To encourage and obtain banker input, the agencies are also holding five roundtable outreach meetings around the country. The meetings will kick off in Orlando on June 11. Other dates are: June 26, St. Louis; July 15, Denver; Sept. 18, San Francisco; and October 15, New York.
ICBA Lends Support. ICBA lent its support to the effort. President and CEO Ken Guenther participated in the kick-off press conference, and posed with regulators and other industry representatives holding chain saws and garden shears over piles of regulations wrapped in red tape.
Guenther noted that regulatory burden is a perennial issue for community banks. "While each regulation may not have a major impact in and of itself, there is a cumulative effect that steadily mounts," Guenther said. "New regulations are continually added but none are ever taken away. As more and more regulations are piled on, we soon reach the point where the straw breaks the camel's back. Regulatory burden is driving industry consolidation and weakening the economy as it diverts resources from community lending."
Guenther urged the agencies to ensure that the effort bears fruit early, and suggested the goal of presenting a white paper to the President shortly after the 2004 election, with targeted ideas for reform to pursue quickly.