18 Month Exam Cycle for Banks Well Managed Banks Under $1 Billion
CSBS believes that advances in off-site monitoring techniques and technology,
and the health of the banking industry, make annual on-site examinations unnecessary for
the vast majority of healthy financial institutions. Therefore, we ask that the mandatory
federal examination cycle be extended from 12 months to 18 months for healthy, wellmanaged banks with assets of up to $1 billion.
Sec. ____Exam Cycle Flexibility for Well Capitalized Well Managed Banks
Section 10(d) of the Federal Deposit Insurance Act (12 U.S.C. 1820(d)) is amended by
striking $500,000,000 wherever it appears and inserting $1,000,000,000.
Regulatory Parity for State Member Banks
CSBS favors a provision that would give the Federal Reserve the necessary
flexibility to allow state-chartered member banks to exercise the powers granted by their
charters, as long as these activities pose no significant risk to the deposit insurance fund.
A major benefit of our dual banking system has always been the ability of each
state to authorize new products, services and activities for their state-chartered banks.
Current law limits the activities of state-chartered, Fed member banks to those activities
allowed for national banks. This restriction stifles innovation within the industry, and
eliminates a key dynamic of the dual banking system.
We endorse an amendment to remove this unnecessary limitation on state member
banks as it has no basis in promoting safety and soundness. Congress has consistently
reaffirmed state authority to design banking charters that fit their unique market needs.
FDICIA, in 1991, allowed states to continue to authorize powers beyond those of national
banks. Removing this restriction on state member banks would be a welcome regulatory
relief.
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Sec. __________ Regulatory Parity for State Member Banks
The 20th undesignated paragraph of Section 9 of the Federal Reserve Act (12 U.S.C. 335)
is amended to read as follows: “[Reserved].”.
De Novo Interstate Branching for Commercial Banks
CSBS seeks changes to federal law that would allow all banks to cross state lines
by opening new branches. While Riegle-Neal intended to leave this decision in the hands
of the states, inconsistencies in federal law have created a patchwork of contradictory
rules about how financial institutions can branch across state lines.
These contradictions affect state-chartered banks disproportionately. Federallychartered savings institutions are not subject to de novo interstate branching restrictions,
and creative interpretations from the Comptroller of the Currency have exempted most
national banks, as well.
Therefore, we ask Congress to restore competitive equity by allowing de novo
interstate branching for all federally-insured depository institutions.
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SEC.___. EASING RESTRICTIONS ON INTERSTATE BRANCHING AND MERGERS.
(a) DE NOVO INTERSTATE BRANCHES OF NATIONAL BANKS(1) IN GENERAL- Section 5155(g)(1) of the Revised Statutes of the
United States (12 U.S.C. 36(g)(1)) is amended by striking `maintain a
branch if--` and all that follows through the end of subparagraph (B) and
inserting `maintain a branch.'.
(2) CLERICAL AMENDMENT- The heading for subsection (g) of
section 5155 of the Revised Statutes of the United States is amended by
striking `STATE `OPT-IN' ELECTION TO PERMIT'.
(b) DE NOVO INTERSTATE BRANCHES OF STATE NONMEMBER
BANKS(1) IN GENERAL- Section 18(d)(4)(A) of the Federal Deposit Insurance
Act (12 U.S.C. 1828(d)(4)(A)) is amended by striking `maintain a branch
if--` and all that follows through the end of clause (ii) and inserting
`maintain a branch.'.
(2) CLERICAL AMENDMENT- The heading for paragraph (4) of section
18(d) of the Federal Deposit Insurance Act is amended by striking
`STATE `OPT-IN' ELECTION TO PERMIT INTERSTATE' and
inserting `INTERSTATE'.
(c) DE NOVO INTERSTATE BRANCHES OF STATE MEMBER BANKS- The
3rd undesignated paragraph of section 9 of the Federal Reserve Act (12 U.S.C.
321) is amended by adding at the end the following new sentences: `A State
member bank may establish and operate a de novo branch in a host State (as such
terms are defined in section 18(d) of the Federal Deposit Insurance Act) on the
same terms and conditions and subject to the same limitations and restrictions as
are applicable to the establishment of a de novo branch of a national bank in a
host State under section 5155(g) of the Revised Statutes of the United States.
Such section 5155(g) shall be applied for purposes of the preceding sentence by
substituting `Board of Governors of the Federal Reserve System' for `Comptroller
of the Currency' and `State member bank' for `national bank'.'.
`(b) MERGER OF NONINSURED NATIONAL BANK WITH ANOTHER
NONINSURED BANK- A noninsured national bank may engage in a
consolidation or merger with any non-insured out-of-State bank, whether such
out-of-State bank is a national bank or a State bank.'.
(d) TECHNICAL AND CONFORMING AMENDMENTS(1) Section 44 of the Federal Deposit Insurance Act (12 U.S.C. 1931u) is
amended-(A) in subsection (a), by striking paragraphs (5) and (6);
(B) in subsection (e), by striking `paragraph (2), (4), or (5)' and
inserting `paragraph (2) or (4)'; and
(C) in subsection (g)(10), by striking `section 18(c)(2)' and
inserting `paragraph (1) or (2) of section 18(c)'.
(2) Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C.
1842(d)) is amended-(A) in paragraph (1)-(i) by striking subparagraphs (B) and (C); and
(ii) by redesignating subparagraph (D) as subparagraph (B);
and
(B) in paragraph (5), by striking `subparagraph (B) or (D)' and
inserting `subparagraph (B)'.
Privacy Notice Requirements
The Conference of State Bank Supervisors endorses approaches, such as the
Communities First Act (S. 14405 introduced in the Senate by Senator Brownback)), that
recognize and encourage the benefits of diversity within our banking system. CSBS
supports the great majority of regulatory burden reductions proposed in the Communities
First Act, believing that they will alleviate the burden on community banks without
sacrificing either safety and soundness or community responsiveness and responsibility.
Our dual banking system exists because one size is not appropriate for every customer,
and one system is not appropriate for every institution.
One provision that we would highlight from that act is Section 203, the exemption
to the annual privacy notice requirement under the Gramm-Leach-Bliley Act for
institutions that have not changed their policies.
SEC. __. EXCEPTION TO ANNUAL PRIVACY NOTICE REQUIREMENT
UNDER THE GRAMM-LEACH-BLILEY ACT.
Section 503 of the Gramm-Leach-Bliley Act (15 U.S.C. 6803) is amended by adding the
following new subsections:
`(f) Exception to Annual Notice Requirement- A financial institution that--
`(1) provides nonpublic personal information only in accordance with the
provisions of subsection (b)(2) or (e) of section 502 or regulations prescribed
under section 504(b);
`(2) does not share information with affiliates under section 603(d)(2)(A) of the
Fair Credit Reporting Act ; and
`(3) has not changed its policies and practices with regard to disclosing nonpublic
personal information from the policies and practices that were disclosed in the
most recent disclosure sent to consumers in accordance with this subsection,
shall not be required to provide an annual disclosure under this subsection until
such time as the financial institution fails to
comply with any criteria described in
paragraph (1), (2), or (3).
`(g) Exception to Notice Requirement- A financial institution shall not be required to
provide any disclosure under this section if-`(1) the financial institution is licensed by a State and is subject to existing
regulation of consumer confidentiality that prohibits disclosure of nonpublic
personal information without knowing and expressed consent of the consumer in
the form of laws, rules, or regulation of professional conduct or ethics
promulgated either by the court of highest appellate authority or by the principal
legislative body or regulatory agency or body of any State of the United States,
the District of Columbia, any territory of the United States, Puerto Rico, Guam,
American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or
the Northern Mariana Islands; or
`(2) the financial institution is licensed by a State and becomes subject to future
regulation of consumer confidentiality that prohibits disclosure of nonpublic
personal information without knowing and expressed consent of the consumer in
the form of laws, rules, or regulation of professional conduct or ethics
promulgated either by the court of highest appellate authority or by the principal
legislative body or regulatory agency or body of any State of the United States,
the District of Columbia, any territory of the United States, Puerto Rico, Guam,
American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, or
the Northern Mariana Islands.'.