From:
Grant Dean
Sent: Thursday, March 25, 2004 10:29 AM
To: Comments
Subject: EGRPRA Comments
Grant Dean
Box 431
Glenwood, IA 51534
March 25, 2004
Dear FDIC:
I am writing on behalf of Glenwood State Bank, a
state-chartered bank
located in Glenwood, Iowa. Our customer base is
primarily agricultural,
but is trending consumer as we are becoming a
bedroom community to Omaha,
Nebraska. Our current asset size is $90,000,000 with
a total consumer and
residential real estate loan portfolio of
$15,000,000. We appreciate the
efforts of the Office of Comptroller of the
Currency, Federal Reserve
Board, Federal Deposit Insurance Corporation and
Office of Thrift
Supervision, “the Agencies”, in reviewing the
current consumer regulations
to identify outdated, unnecessary, or unduly
burdensome regulatory
requirements pursuant to the Economic Growth and
Regulatory Paperwork
Reduction Act of 1996 (EGRPRA). We also appreciate
the Agencies’
recognition and understanding of the challenges
faced by community banks
in meeting the requirements of the ever-growing
number of compliance
regulations.
I would like to offer the following comments
regarding the current
regulatory rules and environment:
The recent revisions to Reg. B which prohibit
lenders from assuming the
submission of a joint financial statement
constitutes a request for joint
credit and now requires whenever more than one
individual applies for
credit, those applicants sign a separate statement
of intent to apply for
joint credit creates additional documentation for
creditors and is often
very difficult to manage, particularly in commercial
and agricultural
transactions involving two or more borrower who are
operating the business
jointly but have not legally organized; for example
a husband and wife or
father and son operating a farm together. Many of
these borrowers
consider themselves a “partnership” although they
are not legally
organized as such. Rather than evidencing intent for
each application,
creditors should be given the latitude to evidence
intent for a specific
purpose, such as 2004 agricultural operating
expenses. Many times
business borrowers have unanticipated credit needs
and time is of the
essence in filling those needs. If a creditor
determines the borrowers
are creditworthy and the purpose of the loan meets
the intent statement
previously affirmed, it seems redundant and
burdensome for both the
applicant and creditor to obtain an additional
statement of intent for
each application/loan for that intended purpose.
The collection of monitoring information continues
to be problematic.
Lenders are often confused as to when to collect the
data and when it is a
violation to collect it. With the growing use of
home equity loans and
lines of credit in the market place, does it not
make more sense to either
collect monitoring data for all loans secured by a
borrower’s principal
dwelling or eliminate collection all together for
non-HMDA and small bank
CRA reporting entities? It certainly would lead to
less Reg. B violations
during exam procedures. The Agencies can be assured
if a bank were guilty
of discriminatory practices, local consumer groups,
state’s attorney
generals and individual consumers would alert them.
The new definition of “refinance” which removes the
purpose test will
undoubtedly result in the added reporting of many
loans whose purpose has
nothing to do with home purchase or home
improvement. Commercial and
agricultural loans will now be reportable at that
time they are refinanced
and retain a security interest in a dwelling.
Another example would be a
farm loan, which is exempt from HMDA reporting when
the farm is being
purchased, becomes reportable if the farmland (which
contains a dwelling)
is refinanced. Obviously, business purpose loans are
priced very
differently from residential real estate loans. In
all likelihood, the
data collected on these loans will not be useful to
the Agencies during a
fair lending review, thus all of the banks efforts
to collect and report
the data are wasted – a true burden! This is also
burdensome for
regulators, as they will have to “sort” through the
data submitted on the
LAR and loan files to determine loan purpose and
explain LAR variances.
Once again, thank you for the opportunity to comment
on these very
important issues. I appreciate your serious
consideration of my concerns
over the above-mentioned regulatory burdens
currently facing America's
community banks.
Sincerely,
Grant C. Dean
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