A Message from FDIC Vice Chairman Reich, On Behalf of the Interagency EGRPRA Task Force April 30, 2004

I want to thank all of you who have helped us develop and launch the EGRPRA project - many bankers, trade associations, consumer groups, regulators, and others have helped us accomplish our initial objectives. It is a pleasure to report to you the progress the EGRPRA Task Force has made to date, particularly in regard to steps taken to (i) reduce regulatory burden, (ii) improve methods for you to communicate your concerns and suggestions, and (iii) create interagency working groups to review your comments and develop recommendations on how to improve the regulatory process.

We have proposed or initiated significant change in several important regulatory areas.

• CRA - On February 6, 2004, the agencies proposed raising the CRA small bank threshold from $250 million to $500 million, eliminating consideration of holding companies.During the comment period which ended April 6, 2004, over 1100 comments were received and are now being evaluated.

• Privacy Notice - In December 2003, an Advanced Notice of Proposed Rulemaking, soliciting comment on ways to improve Privacy Notices required under the Gramm-Leach-Bliley Act, was issued. This notice was available for public comment through March 29 – the eight agencies involved received a total of 254 comments which are being evaluated.

• USA Patriot Act – Customer Identification Program - In January 2004, the agencies issued guidance to bankers on how to structure Customer Identification Programs to meet the requirements of the USA Patriot Act.

• CTRs and SARs - The EGRPRA project team has initiated dialog with FinCEN in an effort to streamline the filing requirements for Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs).

• Call Report Modernization - Under the auspices of the FFIEC, the agencies are building a Central Data Repository (CDR) to modernize and streamline how the agencies collect, process, and distribute bank financial data. Implementation of CDR is slated for the fall of 2004. www.ffiec.gov/find

• Applications - OCC, OTS, and FDIC implemented an interagency charter and federal deposit insurance application that eliminates duplicative information requests by consolidating into one uniform document, the different reporting requirements of the three regulatory agencies.

The FDIC has done the following to relieve regulatory burden.

• Streamlined Examinations - Raised the threshold for well-rated, well-capitalized banks qualifying for streamlined MERIT examinations from $250 million to $1 billion, implemented more risk-focused compliance and trust examinations, and streamlined IT examinations for institutions that pose the least technology risk.

• Electronic Filings - Initiated electronic filing of branch applications and began exploring alternatives for further streamlining the deposit insurance application process in connection with new charters and mergers.

• Deposit Insurance - Simplified the deposit insurance coverage rules for living trust accounts so that the rules are easier to understand and administer. We have also provided bankers with a customized version of the FDIC Electronic Deposit Insurance Estimator (EDIE), a CD-Rom and downloadable version of the web-based EDIE, which allows bankers easier access to information to help determine the extent to which a customer’s funds are insured by the FDIC.

• CRA Credit for MoneySmart - Made it easier for banks to assist low and moderate income individuals, and obtain CRA credit for doing so, by developing Money Smart, a financial literacy curriculum and providing the MoneySmart Program free-of-charge to all insured institutions.

We have created ways for you to communicate your concerns and suggestions.

A unique aspect of EGRPRA is that it requires the agencies, as part of our analysis process, to seek public comment on all regulations. We believe that engaging the financial industry and the public in the process of reviewing regulations and developing recommendations is critical to the success of the program.

• There have been two 90 day public comment periods. On June 23, 2003, the first request for comments was published for 48 regulations falling in three categories – Applications and Reporting, Powers and Activities, and International Operations. On January 21, 2004 the second request for comments was published for seven regulations falling in the category of Consumer Protection – Lending Related regulations. Over the course of the next two years, additional groups of regulations will be published for public comment. Thus far hundreds of comments have been received.

• Since the onset of the project, the agencies have enlisted the support of the national and state trade associations. We continue to solicit their input, advice, and assistance in communicating with bankers and identifying the most significant opportunities for reducing regulatory burden.

• In 2003, the agencies held five outreach meeting across the country so that we could hear directly from bankers. Another banker outreach meeting has already been held this year and two more outreach events for bankers are scheduled in 2004.  A map and listing of outreach events can be seen at Outreach Events.  The many comments and recommendations, covering a wide array of issues, made during these meetings can be read at Comprehensive Issues and Recommendations – Derived from Banker Outreach Meetings.

• In 2004, the agencies sponsored an outreach meeting with consumer and community groups to hear first hand concerns, priorities and recommendations. More meetings will be held with consumer and community groups during 2004. A map and listing of outreach events can be seen at Outreach Events.  Consumer group comments and recommendations can be read at Comprehensive Issues and Recommendations – Derived from Consumer and Community Group Outreach Meeting.

• We have created the EGRPRA web site to facilitate an efficient and effective way for all parties to access EGRPRA information, including charts of regulations, and comments and recommendations recorded during outreach events and submitted in response to open comment periods..

• We have also tried to make the process of submitting comments as easy as possible. You can submit your comments and recommendations directly from this web site through a direct link to e-mail; a single e-mail automatically generates a message to each of the EGRPRA regulatory agencies..

We have established interagency working groups to review comments and formulate recommendations to improve procedures, regulations, and laws.

Since the beginning of the EGRPRA project, we have said that we want changes to be meaningful and to result in an improved regulatory environment for all insured financial institutions. While our banking system is the finest in the world, it is complex. Lawmakers and regulators must always work to strike a balance between establishing laws and regulations that facilitate a strong, safe, and competitive banking system while, at the same time, ensure adequate consumer protections and the availability of financial services. Many of the laws and regulations that appear most in need of change have far reaching implications.

We believe that consensus among the agencies is also critical to achieving significant and meaningful improvement. The agencies have begun meaningful and collaborative dialog to analyze regulations and laws – their intent, cost, benefit, impact, effectiveness – and have committed to tackling even the most significant issues in order to formulate comprehensive recommendations where appropriate. Agency and interagency review of all regulations and comments received thus far has begun. Several working groups comprised of subject matters experts are in place and working hard.

So, yes, I’m pleased to say that the EGRPRA effort is progressing on all fronts – engaging the banking industry and consumers in the process, publishing regulations for comment, and proposing changes that we believe are responsive to the needs of the industry and the public, and responsive to the requirements of EGRPRA. There is more to be done.

We appreciate your support and participation in the EGRPRA process and look forward to your continued input and recommendations!