EGRPRA AND REDUCING REGULATION ON COMMUNITY BANKS
- ICBA will be actively involved in all aspects of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA) process to ensure that it is as robust as possible. ICBA recommends that an overall director of the current EGRPRA interagency review process—an EGRPRA czar— be appointed to ensure that substantive changes to the regulations are made.
- An EGRPRA website should show the top ten burden reducing recommendations made by community banks during the process.
- Already, as part of the EGRPRA review process, regulators have said they support a total community bank exemption under the Volcker Rule and an expansion of the number of community banks that would be eligible for an 18-month safety and soundness exam cycle. ICBA supports both initiatives.
The banking agencies are conducting a two-year review of their regulations to identify outdated, unnecessary or unduly burdensome regulation on insured depository institutions as required under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA).
ICBA and its members were very actively engaged during the first EGRPRA review process which was conducted from 2004 to 2006. Despite the strong involvement and input from community banks during the first EGRPRA review process, community banks and the ICBA were deeply disappointed and disillusioned with the outcome. Since few substantive regulations were repealed, eliminated or substantially amended by the banking agencies, many community bankers have concluded that EGRPRA is no more than a “check the box” regulatory process. On the major issues raised by the bankers in 2004 to 2006, such as repealing the right of rescission under the Truth in Lending Act, raising the $10,000 Currency Transaction Report threshold, or reducing disclosures under the Home Mortgage Disclosure Act, the banking agencies either rejected the recommendations outright or deferred action until further study could be completed.
If the new EGRPRA process is to have any chance at success, there must be a strong commitment by the heads of the banking agencies to do what is necessary to eliminate regulation that is outdated, unnecessary or unduly burdensome. The EGRPRA statutory mandate requires the agencies to go beyond merely streamlining regulations, tweaking certain regulations, eliminating duplication, or deferring action until some further interagency study can be completed. Rather, the mandate requires the agencies to thoroughly review each regulation and eliminate it if it is outdated, unnecessary or unduly burdensome.
There should be an overall director of the current EGRPRA interagency review process—an EGRPRA czar—who has a strong commitment to reducing unnecessary and unduly burdensome regulation and who can, in certain situations, overcome the objections of individual agencies to specific recommendations and resolve interagency disputes. Too often during the last EGRPRA review process, burden reducing recommendations were rejected because of the objection of one agency or because the agencies could not achieve a consensus. Also, the EGRPRA website should show the top ten burden reducing recommendations as it did during the last EGPPRA process.
Already, ICBA has commented on ways to streamline the call reporting burden on community banks, improve and broaden the applicability of the Small Bank Holding Company Policy Statement, simplify Regulation O, and streamline the application process for de novo banks. Regulators have also said they support a total community bank exemption under the Volcker Rule and an expansion of the number of community banks that would be eligible for an 18-month safety and soundness exam cycle, allowing community banks with assets of up to $750 million to qualify. ICBA supports both initiatives.
Staff Contact: Chris Cole