9:00     Welcome – James D. LaPierre, FDIC Kansas City Regional Director

                             Frederick R. Casteel, Office of Thrift Supervision Regional Director

Introductory Remarks

                        Claude A. Rollin, Project Manager (EGRPRA)

            Overview of EGRPRA

            Claude A. Rollin, Project Manager (EGRPRA)

·        Goals of EGRPRA

·        Process to Date

9:30     Overview of Focus Group Process

            Lori McMaster, Facilitator

·        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

            Claude A. Rollin, Project Manager (EGRPRA)  

Attendance:

The meeting was attended by representatives from consumer organizations (The Family Conservancy, Kansas City Church/Community Organization, Hawthorne Place Family Center, Jazz District Renaissance Corporation, Local Initiatives Support Corporation, Northland Neighborhoods, Inc., Black Economic Union of Greater Kansas City, El Centro, Inc., Kansas City Missouri Housing Authority, Hispanic Economic Development Corporation, Legal Aid of Western Missouri, Center for Responsible Lending, Slough, Connealy, Irwin and Madden, Land of Lincoln Legal Assistance Foundation, Inc., Heart of America United Way of Wyandotte County, Brown Law Offices); banks (Central Bank of Kansas City, Industrial State Bank, North American Savings Bank, F.S.B., The First National Bank of Olathe, UMB Bank National Association, First State Bank and Trust, Metcalf Bank, The First State Bank of Kansas City, Valley View State Bank, Capitol Federal Savings Bank, Argentine Federal Savings); 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:

James LaPierre, FDIC Kansas City Regional Director, and Frederick R. Casteel, KC Regional Director, Office of Thrift Supervision, provided welcoming remarks.  Claude A. Rollin, Project Manager (EGRPRA) welcomed the participants and 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:

Both consumer representatives and bankers were supportive of the proposal as written. 

#s 55, 96 Update HOLA – Investments by Thrifts

Both consumer representatives and bankers were supportive of the proposal as written.

#62 Eliminate Prior Written Consent to Establish Branches

Bankers were supportive of the proposal, although mentioning that the elimination of prior consent would have little impact on burden reduction.  Such a waiver of prior consent would also need to apply to the state process as well in order to reduce regulatory burden.  Consumer representatives had strong concerns about the proposal.  There is still a systemic problem concerning where branches are being opened and the issue of underserved communities has not improved much over time.  Location is becoming more important, not less important. Un-doing branches once they are opened is quite difficult.  The current proposal would eliminate the posting of the intent to open a branch on the FDIC’s website, as currently exists now. Many communities have no one monitoring branch openings and rely upon the regulators to help with that monitoring process. Thus, local communities and national consumer organizations would have less notification of the pending branch.  

Consumers recommended considering having institutions develop and publish strategic plans which include descriptions of where they intend to open branches over time, granting written notice waivers for institutions when they are opening branches in low- to moderate-income areas, and continuing internet placement of the intents to open branches.  Bankers recommended that the written waiver be allowed when a branch was being moved within the same community and that regulatory connection (if any) with Proposal #7 (CRA Sunshine Repeal) be considered. 

#63 Eliminate Annual Privacy Notice if no Personal Information Shared 

The agencies have proposed two exemptions from the notice requirements: (1) where a customer has already opted out; and (2) where a bank shares information with unaffiliated parties in a way that does not trigger opt out rights.  Bankers supported both exemptions. While consumer representatives expressed concerns and were cautious about both, they may be willing to support the first option.  A compromise that focuses on the first option could be explored. 

However, consumer representatives expressed strong concerns that any proposal would take even more way from consumers than had been the case when the privacy laws were passed. They still saw benefit in having the right to “opt in” instead of “opt out”, which is currently the case. Consumer representatives also expressed mild concerns about the timing of this proposal, recognizing that work is currently underway to test different formats for consumer privacy notices. Consumer representatives also suggested postponing this proposal until the interagency privacy notice testing project is completed.  That project may lead to legislative recommendations or regulatory change.

#64 Waiver of Three-Day Right of Rescission

Both consumer representatives and bankers expressed strong concerns about the proposal and saw it as weakening consumer protections. The 3-day right of rescission is critical and extends beyond risks associated with predatory lenders.  The current law applies to everyone and should not be eliminated. Both groups also expressed that this proposal had little or nothing to do with regulatory burden reduction.

#65 Increased Flexibility for Flood Insurance

Consumer representatives expressed strong concerns about the proposal.  They believed forced-place insurance is of great concern because it serves as a profit center for lenders and does little to cover the consumers’ interests.  Bankers generally supported the proposal. They did not have strong overall concerns about forced-place insurance because they believe that the need for it rarely arises. When the need does arise, they have been able to place the insurance with the same insurance provider at the same cost as was held before with no cost mark-up to the customer. 

The consumer representative also felt that FEMA should be allowed to complete its map modernization project, rather than permit lenders to rely on surveyors. They also expressed some concern over changing the CMP scheme, but recognized the legitimate need for agency discretion. The consumer representatives and bankers recommended further analysis of the loan threshold amount of $20,000. Consumer representatives suggested the idea of using a percentage of property value rather than a set loan amount.  Bankers suggested raising the limit to $25,000 or possibly limiting the amount to the first lien position.

#79 Mortgage Servicer Exemption to Fair Debt Collection Act

Bankers supported the proposal as written, but mentioned that they had little or no involvement as mortgage servicers.  As such, they were not opposed to the issues raised by the consumer representatives. The consumer representatives expressed strong concerns about the proposal.  They noted systemic problems with mortgage servicing such as the default notices going to the wrong address, the amount owed changing constantly, and records being lost. Consumers need to know who they are dealing with and that they are deemed in default in order to be able to respond appropriately and exercise their rights. The current notice ensures that consumers obtain this information.

Consumer representatives also noted that continuing opportunities for dialogue on other options could help generate more possible solutions.

#91 Continuing Debt Collection Efforts

Bankers supported the proposal as written, but mentioned that they had little or no involvement as mortgage servicers.  As such, they were not opposed to the issues raised by the consumer representatives.

The consumer representatives had concerns, but expressed tentative support for this proposal IF the statutory language specifically included the caveat proposed by the FTC (collection activity should not overshadow or be inconsistent with the disclosure of the consumer’s right to dispute the debt specified). The statutory language currently proposed by the FDIC does not do this.  The consumer advocates correctly noted that the FTC has no rulemaking authority in this area.  See 15 U.S.C. Section 1692l(e). 

#115  Electronic Funds Transfer Act

Both 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 and provides bankers with more time to give that notice.

Claude Rollin 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.

Other Regulatory Issues:

The bankers raised a few other regulatory issues for regulator consideration during their focus group in addition to the ten proposals they reviewed: 

• Yearly Truth in Savings disclosure for Certificates of Deposit is not necessary and could be eliminated.
• Exempt smaller institutions from HMDA (issue was raised by a regulator).
• Distinguish between large banks and community banks when applying regulations (a long term goal).
• Conform NACHA and EFTA rules regarding 60-day error resolution.