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National Penn
SUBJECT: EGRPRA – Comments regarding reduction
of regulatory burden
DATE: May 4, 2005
Dear Sir or Madam:
Thank you for the opportunity to comment on those regulations
where we feel changes are necessary, either due to outdated
regulations or where it just doesn’t make sense
or serve any realistic purpose.
National Penn Bank is a subsidiary of National Penn Bancshares,
Inc. a $4.5 Billion holding company located in southeast
Pennsylvania and Maryland. Here is our list for consideration:
1. CTR Reporting Threshold should be increased.
The $10,000 threshold has been around since the late
1970’s and has not had a “cost of living” or
a time value adjustment since its inception. The resources
for monitoring and tracking this are ever increasing
as our company grows in size. We suggest a value of $25,000
to $30,000 for monitoring. While we understand and appreciate
the value of monitoring for BSA and AML issues, this
threshold appears to be too low, and it clutters up the
system with too much information, allowing the meaningful
information to potentially slip by.
2. Monitoring of Money Service Businesses for BSA/AML.
The time and cost associated with monitoring Money Service
Businesses is prohibitive. Many of the larger banks have
started charging fees and or have gotten out of the business
entirely. Many MSBs in our area service a small remote
community and play a part in that community as convenience
stores, small specialty shops small grocery stores and
the like. To discontinue business with them is doing
a disservice to that community. Yet, we the bank bear
the cost of monitoring that business. While our staff
is very good at identifying risks, they are not regulators,
and could miss something. I agree those large commercial
check cashers, payday lenders and the like pose a greater
risk for us than the smaller “Mom and Pop” shops.
We are glad that FinCen defined this, however because
it is such a hot topic, feel that it is not as easy as
black and white.
3. Annual Privacy Notices – GLBA.
I consider customer privacy the backbone of the banking
industry; however, there are some changes that should
be made to this regulation. The annual privacy notice
that banks are required to send to their customers is
costly and quite frankly confusing to a lot of our consumers.
While the regulation gives model disclosures, which we
use, most consumers want something that is in simple
and easy to understand in plain English, not legalese.
Additionally, if we have not changed our privacy policy,
I believe there should be an exemption that we should
not have to re-send the notice every year. After all,
we give them out for new accounts, upon request and have
it displayed on our web-site. Many consumers tell us “don’t
send us that junk mail” at the time we mail the
privacy notices and of course, we have to pay someone
to tell them that “junk mail” is our privacy
notice and what it means. This all increases the cost.
4. Regulation D – Limitations on Transfers from
Money Market Deposit Accounts.
In today’s world, this is probably the most antiquated
rule remaining. Even though we have this disclosure in
our Deposit Agreements and tell consumers about it, they
forget and make multiple transfers over the limits, thereby
generating a notice and possible closing of their account.
I understand that the initial purpose of a MMD account
was a savings account, and thus in order to get interest,
the limits were placed on it, however it is extra monitoring
and explaining to consumers that could and should be
avoided.
5. Regulation E – Electronic Funds Transfers.
One area where common sense seems to play little part
is the consumer liability area for unauthorized transactions,
particularly when a consumer writes their PIN (Personal
Identification Number) right on the card. In my mind
the consumer plays some role in making sure they are
protecting their funds and their account. I believe the
liability should be increased from $50 to $500 for either
the second or third incident of this type of unauthorized
transaction. After all, why should the bank, who tells
the consumer to protect their PIN eat this cost. Many
times it is the repeat offenders who are not playing
fair.
6. Home Mortgage Disclosure Act (HMDA).
The costs of software and monitoring needed to comply
with data collection and reporting requirements seems
to fall short of fulfilling its purpose of monitoring
discrimination. I would suggest that we remove unnecessary
data fields and focus on the fields that are truly meaningful,
or possibly use market share to determine whether a bank
is fulfilling its obligations.
7. Flood Insurance.
One of the issues that repeatedly comes up in our company
is flood insurance, particularly on high value loans
and high value properties. While I understand the FEMA
limits, and requirements consumers who have not previously
had mortgages often feel that we are being unreasonable
in requiring Flood Insurance. This sometimes happens
when another institution does not require flood, but
should have, or the borrower has never had a bank loan.
In addition when a shoreline property is very high value,
often times lenders and consumers complain that a $250,000
limit on a property that is worth $2.5 Million is ridiculous,
because the $250,000 is not near enough. There is very
little leeway built into the flood guidelines, particularly
if a bank is making a loan on credit or character, and
the property is an abundance of caution.
An additional item concerning Flood is the “Notice
of Flood Insurance Form”. The requirement states
that the form must be provided to the borrower in a reasonable
time before settlement. When you have loans that close
in a short period of time, it seems like an unnecessary
form when we already have proof of flood insurance before
the loan settlement.
8. FACT Act Credit Score Disclosure.
This new disclosure seems to confuse borrowers more than
anything, particularly the part that specifies key factors.
The “Key Factors” are determined by the Credit
Reporting Agency, but since the bank is the one required
to send the disclosure, the consumer automatically thinks
the bank can either change this or explain it in detail.
I agree with the intent and purpose of the FACT Act,
to fight identity theft, but the disclosure is only required
on consumer purpose, real estate secured loans. It would
seem that if we made a car loan, or an unsecured loan
or line, and pulled a credit report that it should apply
equally, since identity theft doesn’t only occur
on real estate secured transactions. It would make more
sense for the credit disclosure to print at the bottom
of the credit report and all inquiries to be made to
the credit reporting agency, rather than the bank.
9. Time Line for Regulatory Compliance.
Many of the recent regulations had very short time lines
for implementation: CIP and the USA Patriot Act, Check
21, the FACT Act to name a few. Three to six months of
implementation time is insufficient when we all still
have the business of every day banking to contend with.
In our company many of these would involve systems, forms,
disclosures, training and the like for the holding company
as well as the affiliates. Plus, recently we were going
through several acquisitions, making this short timeline
a challenge for sure!
Thank you for consideration of our viewpoints.
Sincerely,
Debra A. Wetzel, MBA, CIA, CRCM, CRP
Vice President & Bank Compliance Manager
National Penn Bancshares, Inc. (National Penn Bank)
Philadelphia & Reading Avenues
Boyertown, PA 19512 |
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