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Peoples
State Bank of Francesville
From: Roger Cummings
Sent: Thursday, August 26, 2004 10:12 AM
To: Regulatory Comments FRB; Comments; regs.comments@occ.treas.gov; regs.comments@ots.treas.gov
Subject: EGRPRA
Regulators,
I would greatly appreciate an honest effort to reduce regulations. I am the
president of a small bank in rural Indiana, $139,000,000. Regulations have
reduce our efficiency greatly. We spend resources, both financial and personnel,
to make sure we aren't going to violate some regulation knowing full well that
we will because there are so many and they are so complicated. The government
bureaucrats think that this regulation won't cost much. Maybe individually
they don't but they add up quickly.
We are in the process of mailing out our annual privacy notice that nobody
reads. We are a small institution that mailed our 5,845 notices. Postage, printing
cost, envelopes, mailing labels and staff time cost us about $5,000 or almost
$1 per notice. Take that times the number of notices sent by all banks, how
about all those required to send notices. Now, how many notices does the consumer
read from their credit card companies, banks, insurance companies, investment
providers etc. This is one of the most costly regulations that provides very
little return. It would seem that if we provide the notice to a customer once
and anytime we changed our policy we provided a new notice. If we made the
notice available upon request that should provide sufficient opportunity to
review it. It is posted on our web site also.
Take a mortgage loan file and see how many documents are required. First, consumers
have no idea what the file contains and just sign were ever they are required
to. It would make sense to consolidate and better yet eliminate some of the
documents. Regulations are added and changed which cost the bank and the consumer.
We now charge $250 to process a mortgage loan. That is to cover mostly the
compliance costs and that doesn't include the flood determination for property
no where near a river or a flood area. Every mortgage pays $18 for a flood
determination when we would have to go back to Noah's time to flood that property.
We just had our CRA examination. The examiner said that a community bank would
have a difficult time receiving an outstanding rating because we have to prove
that we actively have programs for low income areas. It doesn't matter that
our loan portfolio reflects that we loan in all areas and are serving our communities.
That we have staff involved in community organizations etc. It matters how
much we spend on programs for window dressing to make it look like we are doing
things specifically for CRA.
It is my opinion that the regulators would like to see fewer banks and that
the small ones can be choked out by overhead costs related to compliance. How
can a $50,000,000 bank afford the compliance burden that has increased with
GLB and other new regulations? There will be more consolidations among the
small banks. Do the regulators care what it does to a small community when
they loose their local bank. We employ about 25 peoples in a town of less than
1,000. If we were to sell or merge with a bigger institution it would take
6 to run the branch. More importantly will be the loss of community leaders
which there is already a shortage of. We are at the point that we need to merge
with another community bank to reduce our overhead costs. If we can't control
the costs we will no longer be competitive in our markets.
I hope this effort is serious and that there will be reductions in compliance
cost. I have a hard time believing it will happen while I'm in banking but
let's hope so.
Roger Cummings
Peoples State Bank of Francesville
Francesville, IN |
