The Independent Community Bankers of America (ICBA) is calling on federal banking regulators to exempt community banks from new reporting burdens designed for larger financial institutions. In a recent comment letter to the banking agencies, ICBA raised questions about the validity and usefulness of the information requested through the proposed changes to quarterly call reports and urged an exemption for banks with total consolidated assets of $10 billion or less.
“Enough is enough! The call report has ballooned in size and complexity in recent years and now occupies a substantial amount of reporting institutions’ time and resources,” ICBA President and CEO Camden R. Fine said. “This is particularly true for community banks, which do not have large regulatory compliance teams but nevertheless are required to meet a litany of complex and often unnecessary regulatory mandates. ICBA is urging the banking agencies to exempt community banks from the latest expansion of reporting requirements so these institutions can devote more of their resources to serving their customers and promoting local economic growth and less to dealing with regulatory red tape.”
Despite having less complicated operations and activities compared with larger banking institutions, community banks are required to file long-form call reports with their regulators on a quarterly basis. The call report has expanded from 18 pages in 1986 to 29 pages in 2003 to nearly 80 pages of detailed financial reporting fields today. In fact, the quarterly call report has more pages than the typical American community bank has employees.
To mitigate these burdens, ICBA believes that highly rated, well-capitalized community banks should be allowed to file a “short form” call report in two non-consecutive quarters each year. The short form call report would provide sufficient information to allow regulators to assess the safety and soundness of community banks, but would be significantly less burdensome to prepare, allowing these institutions to focus more resources on lending to their customers and communities.
The regulators’ proposal to expand call report requirements for consumer deposit account balances is the latest in a long line of new reporting burdens for community banks caused by policies directed at larger financial institutions that offer commoditized financial products. In its comment letter to the agencies, ICBA wrote that the expanded reporting is counterproductive and detracts from the safety and soundness reporting that regulators, depositors and other stakeholders use to determine a bank’s overall health. Further, as relationship lenders, community banks often tailor for their customers financial products that may not be easily categorized based on the agencies’ descriptions.
“Community banks of all sizes have come under immense regulatory scrutiny with layer upon layer of new federal rulemakings that seek no other useful purpose than to force the consolidation of the industry,” ICBA wrote. “This expanded use of information collection represents yet another reporting burden that taxes community banks while providing no real tangible benefit.”