In a comment letter on consumer lending regulations, ICBA told the four federal banking agencies that now is the time to address regulatory burden. "Community bankers work diligently to serve their customers, but find that regulations-especially consumer lending regulations-consume valuable resources and can interfere with good customer service," wrote ICBA Chairman Dale L. Leighty, president of First National Bank of Las Animas, Colorado. "Regulatory and paperwork requirements impose a disproportionate burden on community banks with their limited human, financial and other resources."
Bank regulators are currently considering how to reduce the burden of consumer lending regulations as part of their overall review of bank regulations, as mandated by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
ICBA's comments highlighted many areas where regulatory burden creates problems, such as the right of rescission-an especially vexing requirement for customers who seldom exercise the right but resent the three-day wait for their loan proceeds. Other examples ICBA cited include restrictions on advertising that interfere with providing loan information, Home Mortgage Disclosure Act (HMDA) data collection requirements that drive up mortgage costs, and new restrictions that complicate lending to spouses.
"It's time to acknowledge that consumer protection regulations are not only a burden to banks but are also a problem for consumers," said Leighty.
ICBA further urged the agencies to constantly assess regulatory burden, incorporating careful and accurate cost-benefit analysis into all facets of the regulatory process. "The community banking industry is slowly being crushed under the cumulative weight of regulatory burden," ICBA wrote, "causing many community bankers to seriously consider selling or merging with larger institutions, taking the community bank out of the community."
Using the ICBA website, several hundred ICBA members sent their own comments, both to regulators and to their congressional representatives, urging them to address these problems. Thank you to all bankers who took the time to comment on this important issue! The ICBA's letter is at www.icba.org.