OCC Chief Counsel Julie L. Williams Tells Senate Banking Committee
That Unnecessary Regulatory Burden Hurts Both Banks and Consumers
WASHINGTON
OCC Chief Counsel Julie L. Williams told a Senate panel today that unnecessary
regulatory burden has significant adverse consequences for both banks and their
customers.
When unnecessary regulatory burdens drive up the cost of doing business for
banks, bank customers feel the impact in the form of higher prices and, in some
cases, diminished product choice, Ms. Williams said in testimony before the
Senate Banking Committee.
Unnecessary regulatory burden also can become an issue of competitive
viability, particularly for our nations community banks, where bankers face
competitors that offer comparable products and services but are not subject to
comparable regulatory requirements, she added.
Ms. Williams said regulatory burden is an issue that must be confronted
on three levels. First, she said, regulators have a responsibility to ensure
that regulations are effective to protect safety and soundness, foster the
integrity of bank operations and safeguard the interests of consumers.
In addition, she said, some regulatory burden initiatives require action
by Congress in the form of federal legislation. And finally, she added, it is
important to recognize that some regulatory requirements that bankers have
highlighted involve requirements set by Congress.
Over the years, those requirements have accreted, and in the disclosure
area, in particular, consumers receive disclosures so voluminous and so
technical that many simply dont read them or when they do, dont understand
them, she said.
Ms. Williams said it may be necessary to face fundamental questions about
the basic approach to regulatory burden, but noted that a responsible inquiry
would require much better data than is now available on the costs of complying
with individual regulations and the benefits that result. She urged the
committee to consider what sort of information and analysis would be needed as
a foundation for such an undertaking.
Ms. Williams said the OCC constantly reviews its regulations with an eye
toward easing unnecessary burden. In addition, she said, the OCC recently
finalized a rule allowing national banks to file applications electronically, a
step that materially reduces paperwork burdens.
Ms. Williams also urged the Committee to consider legislative changes
that would:
- Repeal the state
opt-in requirement that in many states blocks banks from expanding
interstate through de novo branches, without first buying an
existing bank or branch.
- Allow directors
of banks organized as subchapter S corporations to satisfy directors
qualifying share requirements by purchasing subordinated debt instead of
capital stock.
- Clarify that, for the purpose of determining
Federal court diversity jurisdiction, national banks and federal thrifts
are citizens only of the state in which they have their main office.
- Amend the International Banking Act
of 1978 to allow the OCC to set the capital equivalency deposit (CED) for
Federal branches and agencies to reflect the risk profile of the branch or
agency, creating a capital framework for those entities that closely
resembles the risk-based framework now applicable to domestic banks.
# # #
|
The OCC charters, regulates and examines
approximately 2,000 national banks and 51 federal branches of foreign banks
in the U.S., accounting for more than 56 percent of the nations banking
assets. Its mission is to ensure a safe and sound and competitive national
banking system that supports the citizens, communities and economy of the
United States.
|