San Antonio, TX
Acting Comptroller of the Currency Julie L. Williams told an audience of
community bankers today that compliance requirements represent a serious drain
on their resources and said regulatory relief should be a national priority.
In a speech before the
Independent Community Bankers of America, Ms. Williams said that bank
regulators, academic economists, and bankers all agree that compliance costs
represent a serious burden for all banks, particularly community banks, and we
need to do something about it.
Ms. Williams cited
consumer compliance disclosure requirements as being ripe for regulatory
relief.
The reams of
disclosures you are obliged to provide arent working very well to inform your
consumers about the things those customers really want to know, she said.
One of the nations
great strengths, she said, is its belief in free markets and its unwillingness
to dictate price and terms of products and services. But in order for the free market to work at the consumer level,
consumers need to have the means to make informed decisions.
For that reason, I am
a strong advocate of incorporating consumer testing, conducted by experts in
the field, whenever bank regulators impose disclosure requirements, Ms.
Williams said. The end result should
be shorter disclosures; disclosures that customers can understand; and
disclosures that tell customers what they really want.
Ms. Williams pointed
out that banks would benefit because shorter, focused consumer disclosures
would reduce paperwork costs, and the time and money spent on lawyers and
consultants navigating through complicated requirements could be redirected to
better serving customers and improving returns for stockholders.
Ms. Williams also addressed
several apparent misconceptions about the OCCs position on enforcement of the Bank Secrecy Act and
anti-money laundering standards, and relationships with money service
businesses, or MSBs.
It is absolutely not
OCCs intent that national banks should be forced to sever their relationships
with money service businesses, Ms. Williams said. MSBs play a vital role in the national economy, providing
financial services to individuals who are not otherwise part of the mainstream
financial system. What we absolutely
are saying, however, is that banks need to have controls commensurate with and
adequate to monitor, manage, and control the different levels of risk presented
by different types of MSBs.
Ms. Williams also
emphasized that no national bank examiner alone has the power to issue a
cease-and-desist order and that all proposed BSA citations are considered by
the agencys Washington Supervision Review Committee, which reports directly to
the Senior Deputy Comptrollers for Bank Supervision. She stressed that since
the agencys enforcement guidance was issued in November 2004, approval to
issue cease-and-desist order has been granted only on the infrequent occasion
when a banks BSA violations met a standard of persistence or egregiousness
that set it apart.
Addressing the
inter-agency Community Reinvestment Act proposal, Ms. Williams summarized the
flexible new community development test for small banks between $250 million
and $1 billion in assets and the increased asset threshold of $1 billion for
when a bank is subject to large bank lending, investment, and service tests
to $1 billion.
We heard you on the
issue of unnecessary regulatory burden imposed on community banks that are
treated as large banks under the present rule, Ms. Williams noted. At the same time, we sought to ensure that
those banks basic obligations under the CRA were not undercut.
Ms. Williams concluded
by stating that community banking is a vital component of our national economic
infrastructure.
All of us should have
a common goal to ensure that the next generation of the best and the brightest
see community banking as a vibrant, prosperous and promising business; a
business that they want to be a part of because it delivers financial services
and promotes economic vitality in communities large and small, urban, suburban,
and rural, throughout the land.
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The Office of the
Comptroller of the Currency was created by Congress to charter national banks,
to oversee a nationwide system of banking institutions, and to assure that
national banks are safe and sound, competitive and profitable, and capable of
serving in the best possible manner the banking needs of their customers.