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Contact:	Robert Schmermund (202) 857-3104 Jim Eberle (202) 857-3145	Jim Eberle (202) 857-3145 (work) (703) 893-2593 (home) [email protected]	For Immediate Release June 21, 2005 #05-39
E-mail: [email protected]

ACB URGES CONGRESS TO REDUCE REGULATORY BURDEN ON BANKS

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WASHINGTON, D.C. — America’s Community Bankers urged Congress today to enact legislation to address the impact of outdated and unnecessary regulations on community banks.

In testimony before the Senate Banking Committee, which is drafting a bill, Arthur R. Connelly, chairman of ACB’s Government Affairs Steering Committee, said: "Community banks today are subject to a host of laws, some over a half-century old, that originally were enacted to address concerns that no longer exist. These laws stifle innovation in the banking industry and put up needless roadblocks to competition without contributing to the safety and soundness of the banking system."

Connelly, who is also chairman and CEO, South Shore Savings Bank, South Weymouth, Mass., added: "Every new law that impacts community banks brings with it additional requirements and burdens. This results in layer upon layer of regulation promulgated by the agencies, frequently without regard to the requirements already in existence.

"The burden of these laws results in lost business opportunities for community banks. But consumers and businesses also suffer because their choices among financial institutions and financial products are more limited as a result of these laws, and, in the end, less competition means consumers and businesses pay more for these services."

Connelly discussed the implementation of two laws that have created "uncertainty and confusion" at community banks. While bankers support the goals of the Bank Secrecy Act’s requirements in fighting money laundering, he cited the inconsistent messages being sent by bank regulatory and law enforcement agencies making compliance more difficult.

Bankers also support the Sarbanes-Oxley Act’s requirements for more transparency in financial reporting, but the regulations "have led to unintended consequences that are costly and burdensome," he said.

Connelly endorsed 32 amendments to current laws to reduce unnecessary regulations on community banks. He highlighted three proposals:

Privacy Notices. ACB is recommending elimination of annual privacy notices for banks that do not share information with nonaffiliated third parties. "We should provide customers with an initial notice, and be allowed to provide subsequent notices only when terms are modified," said Connelly.
"At my bank, we send out thousands of those notices each year at significant cost in both dollars and staff time, even though our policies and procedures have remained consistent over many years. Redundancy does not enhance consumer protection; it numbs our customers with volume."
Business Lending. ACB is seeking removal of the lending limit for savings associations on small business loans and a modest increase in the limit on other commercial loans to 20 percent of assets. Connelly said that with expanded authority "savings associations could then make more loans to small- and medium-sized business, enhancing their role as community-based lenders."
SEC Parity. ACB is urging statutory parity for savings associations with commercial banks offering the same trust services from certain registration requirements of the Investment Advisers Act of 1940 and the Securities Exchange Act of 1934.

"Savings associations and banks should operate under the same basic regulatory requirements when engaged in identical trust, brokerage and other activities," Connelly said.

Click here to read the testimony.

America’s Community Bankers is the national trade association committed to shaping the future of banking by being the innovative industry leader strengthening the competitive position of community banks. To learn more about ACB, visit www.AmericasCommunityBankers.com.

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