9:00     Welcome – Donna J. Gambrell, Deputy Director, FDIC
           Introductory Remarks - John M. Reich, Director, OTS

             Overview of EGRPRA

            Claude A. Rollin, Project Manager (EGRPRA)

·        Goals of EGRPRA

·        Process to Date

9:30     Overview of Focus Group Process

            Facilitator: Lori M. McMaster, Program Analyst, FDIC

·        Introductions of Attendees

·        Description of Today’s Focus Group Process and Desired Outcomes

9:45     Breakout Focus Group Sessions to Discuss Reactions to the Draft Regulatory Proposals

11:00   Break

11:15   Focus Groups Report Results of Their Discussions and Solicitation of Ideas for

            Next Steps                       

12:00   Lunch

1:00     Focus Groups Re-Convene for Report Out of Results and Solicitation of Ideas for Next Steps
           (continued) 

3:00     Closing Remarks

            Donna J. Gambrell, Deputy Director, FDIC

Attendance:

The meeting was attended by representatives from consumer organizations (Delaware Community Reinvestment Action Council, Inc., Los Angeles NHS, Springfield Massachusetts NHS, NHS of the Leigh High Valley, NHS Birmingham, CCCS of Greater Washington, City University of New York); bankers (Provident Bank,  Harbor Bank of Maryland, Mercantile Peninsula Bank, Delaware National Bank, PNC Financial, E*Trade Financial, Advanta Bank Corporation); and the banking regulatory agencies (Federal Deposit Insurance Corporation, Office of Thrift Supervision, Office of the Comptroller of the Currency, and the Federal Reserve Board).

Summary of Discussions:

Donna Gambrell provided welcoming remarks, sharing some insights into prior consumer organization meetings and the uniqueness of this meeting.  This meeting has brought together field practitioners from both the consumer organization community and the financial institution industry who work with the regulations and consumers every day.  With that insight, the participants’ input will be quite valuable to the EGRPRA analysis process.  OTS Director, John Reich, welcomed the participants and shared his perspectives on the need for regulatory burden reduction, particularly from his background as a community banker.  He encouraged the participants to share their ideas freely and asked all attendees to introduce themselves.  EGRPRA Project Manager, Claude Rollin, provided a brief overview of the EGRPRA project history and purpose. 

The attendees then formed two focus groups – one for the consumer organization representatives (facilitated by Lori McMaster, FDIC) and one for the financial institution representatives (facilitated by Barbara Pfaffenberger, FDIC) – and discussed each of the proposals. Regulatory representatives were available to both groups to answer questions, as needed.  Each focus group shared their respective views on each proposal and later reconvened together to compare views and ideas for possible proposal changes and edits which might help bring differing views closer together, if applicable.

The proposals discussed and the views of the bankers and consumer representatives are summarized in the table below:

B - Bankers
CR - Consumer Representatives
S – Group supported the proposal
C – Group expressed concerns about the proposal

#* These consumer-protection proposals are from a larger matrix of regulatory proposals covering a wide range of topics. The numbers correspond to their number on the larger matrix.

Group comments on each proposal, as well as suggested alternatives for the regulatory community to consider (if applicable), were as follows:

# 7 Repeal CRA Sunshine:

Bankers were supportive of the proposal as written, mentioning that agreements are often transparent regardless of the CRA Sunshine provisions due to newspaper articles, joint press announcements, and similar publicity.  The agreements are also public knowledge through the CRA Public Evaluation.  Consumer representatives expressed mild concerns about the proposal. One consumer representative expressed hope that CRA could be strengthened in some way, if this aspect of the Gramm Leach Bliley Act (GLBA) was being eliminated. 

#s 55, 96 Update HOLA – Investments by Thrifts

Consumer representatives expressed mild concerns about the proposals. They suggested that the terms “public welfare” and “investment grade” be more clearly defined within the proposal and that examples of appropriate investments be included. Their primary concern was that the proposals, as written, might lead to the unintended consequence of enabling or inviting predatory lending.  Bankers were supportive of the proposal as written, but also amenable to the clarifications proposed by the consumer representatives. Bankers also offered the alternative of raising the percentage of investment from 10% (as proposed) to 15%.  Both consumer representatives and bankers asked that the percentage investment limits be made consistent among all banks and that the language in the proposal be clarified to reflect that consistency.

#62 Eliminate Prior Written Consent to Establish Branches

Consumer representatives expressed strong concerns about the proposal. They wanted to preserve the right to comment and be able to review the locations of branches and income levels to be served by those branches. They asked that the proposal be edited to clearly indicate the following proposed process:  Step 1: Newspaper notification of branch opening should be published as widely as possible, Step 2: 30-day period to comment, Step 3: If comments received, then regulator evaluates and reviews, and Step 4: Process formal branch opening application.  Bankers supported the proposal as drafted and had no objection to the public notice process clarifications proposed by the consumer representatives.

#63 Eliminate Annual Privacy Notice if no Personal Information Shared

Consumer representatives expressed mild concerns about the proposal and recommended that language be added to clarify that it would be fine for bankers not to issue the annual privacy notice (as stated in the current proposal) unless the institutions changed their business strategy and began to share information with affiliates or third parties.  If so, the institution should have to give notice to their customers and afford them the opportunity to opt out.  Bankers had no objections to the current proposal or this clarifying language. Bankers noted that only about 1% of customers opt out and it is actually easier (and less burdensome) for them to annually notify everyone rather than analyze and segment out those customers that have opted out. 

#64 Waiver of Three-Day Right of Rescission

Consumer representatives expressed strong concerns about the proposal.  They believed consumers must have the 3-day right of rescission as a basic protection. The consumer representatives, as practitioners, had first hand experience with less financially sophisticated clients and how important the right of rescission can be.  The marketplace provides more kinds of lending products than ever before and predatory lending is on the rise. These conditions make it even more important to maintain the right of rescission.  Consumer representatives also noted that bankers can often find other means to accelerate closure of such transactions, perhaps through moving up closing dates or other options. 

Bankers were supportive of the proposal as written, but offered possible alternatives such as “risk rating” lenders or adopting varying loan amounts where such rescission waivers might be allowed.  Bankers would like to see more definitive examples of when customers could waive their right to rescind in the proposal language.  The bankers also noted some concerns including that the proposal could add some confusion to the loan closing process, would require some timing adjustment to the issuance of the HUD1 statement (a Real Estate Settlement Procedures Act issue), and would not necessarily deter predatory lenders. 

#65 Increased Flexibility for Flood Insurance

Bankers and consumer representatives were supportive of the proposal as drafted.

#79 Mortgage Servicer Exemption to Fair Debt Collection Act

Consumer representatives expressed strong concerns about the proposal. Providing more notice to consumers is better than less notice. They also believed that the additional effort bankers expend for the “mini-miranda” notices has value and may, in fact, encourage consumers to repay their debts.  Consumer representatives also suggested that proposal language be very clear regarding who the consumer should be communicating with related to the disputed debt or repayment.  It is easy for consumers to become confused about where payments should be sent when the loan changes hands.  Bankers were supportive of the proposal as written, while acknowledging the concerns of the consumer representatives.

#91 Continuing Debt Collection Efforts

Bankers and consumer representatives supported the proposal, assuming it will include the FDIC proposed additional language regarding conspicuous notification and further Federal Trade Commission involvement in defining “conspicuous notice.”  

#115  Electronic Funds Transfer Act

Bankers and consumer representatives supported the proposal as drafted, as it does provide additional notice to consumers about changes in account terms, consistent with timeframes in the Truth in Savings Act.

Donna Gambrell provided closing remarks to the attendees and thanked them for their participation and insights. The input will be considered by the regulatory agencies in the weeks ahead.