Acting Comptroller Williams Tells Bankers Regulatory Burden Relief Should be a National Priority

San Antonio, TX – Acting Comptroller of the Currency Julie L. Williams told an audience of community bankers today that compliance requirements represent a serious drain on their resources and said regulatory relief should be a national priority.

In a speech before the Independent Community Bankers of America, Ms. Williams said that bank regulators, academic economists, and bankers all agree that compliance costs represent a serious burden for all banks, particularly community banks, “and we need to do something about it.”

Ms. Williams cited consumer compliance disclosure requirements as being ripe for regulatory relief.

“The reams of disclosures you are obliged to provide aren’t working very well to inform your consumers about the things those customers really want to know,” she said.

One of the nation’s great strengths, she said, is its belief in free markets and its unwillingness to dictate price and terms of products and services.  But in order for the free market to work at the consumer level, consumers need to have the means to make informed decisions.

“For that reason, I am a strong advocate of incorporating consumer testing, conducted by experts in the field, whenever bank regulators impose disclosure requirements,” Ms. Williams said. “The end result should be shorter disclosures; disclosures that customers can understand; and disclosures that tell customers what they really want.”

Ms. Williams pointed out that banks would benefit because shorter, focused consumer disclosures would reduce paperwork costs, and the time and money spent on lawyers and consultants navigating through complicated requirements could be redirected to better serving customers and improving returns for stockholders.

Ms. Williams also addressed several apparent misconceptions about the OCC’s position on enforcement of the Bank Secrecy Act and anti-money laundering standards, and relationships with money service businesses, or MSBs.

“It is absolutely not OCC’s intent that national banks should be forced to sever their relationships with money service businesses,” Ms. Williams said. “MSBs play a vital role in the national economy, providing financial services to individuals who are not otherwise part of the mainstream financial system. What we absolutely are saying, however, is that banks need to have controls commensurate with and adequate to monitor, manage, and control the different levels of risk presented by different types of MSBs.”

Ms. Williams also emphasized that no national bank examiner alone has the power to issue a cease-and-desist order and that all proposed BSA citations are considered by the agency’s Washington Supervision Review Committee, which reports directly to the Senior Deputy Comptrollers for Bank Supervision. She stressed that since the agency’s enforcement guidance was issued in November 2004, approval to issue cease-and-desist order has been granted only on the infrequent occasion when a bank’s BSA violations met a standard of persistence or egregiousness that set it apart.

Addressing the inter-agency Community Reinvestment Act proposal, Ms. Williams summarized the flexible new community development test for small banks between $250 million and $1 billion in assets and the increased asset threshold of $1 billion for when a bank is subject to “large bank” lending, investment, and service tests to $1 billion.

“We heard you on the issue of unnecessary regulatory burden imposed on community banks that are treated as “large banks” under the present rule,” Ms. Williams noted. “At the same time, we sought to ensure that those banks’ basic obligations under the CRA were not undercut.”

Ms. Williams concluded by stating that community banking is a vital component of our national economic infrastructure.

“All of us should have a common goal to ensure that the next generation of the best and the brightest see community banking as a vibrant, prosperous and promising business; a business that they want to be a part of because it delivers financial services and promotes economic vitality in communities large and small, urban, suburban, and rural, throughout the land.”

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