CUNA Comment Letter

Notice of Proposed Rulemaking regarding Community Bank-Focused Regulation Review

July 23, 1999

Office of the Comptroller of the Currency
Communications Division, Third Floor
250 E Street, SW
Washington, DC 20219

In Re Docket No. 99-05

To Whom It May Concern:

The Credit Union National Association appreciates the opportunity to comment on the Advance Notice of Proposed Rulemaking regarding Community Bank-Focused Regulation Review published by the Office of the Comptroller of the Currency May 12 in the Federal Register. By way of background, CUNA represents over 90% of the nation's more than 11,000 state and federal credit unions. Currently, more than 78 million consumers belong to a credit union in this country.

In the past, CUNA has rarely filed comments on regulatory issues relating solely to banks. However, the Advance Notice regarding the agency's review of regulatory requirements for community banks raises a number of issues on which we believe it is appropriate for us to comment on behalf of credit unions and their members.

OCC Should Support Additional Substantive Measures by Congress to Reduce the Regulatory Burden on All Financial Institutions

The number and complexity of regulatory requirements under which all types of financial institutions must operate is horrendous, and a thorough congressional review of their regulation burden for credit unions, banks and thrifts is long overdue. We urge the OCC, working with the other financial institution regulators including the National Credit Union Administration, to utilize its considerable influence to persuade Congress to conduct hearings and develop additional legislation that will provide more measurable relief to financial institutions, without jeopardizing meaningful protections for consumers or safety and soundness.

OCC Should Not Define "Community Bank" Arbitrarily

The Advance Notice requests comments on whether the OCC should develop a definition of "community bank" and how that term should be defined for purposes of the agency's regulatory review. In formulating this definition for purposes of reduced regulatory burden, the Advance Notice also asks if the OCC should consider factors other than asset size, such as whether the bank is the sole provider of banking services in a community, regardless of asset size, thus qualifying it for a reduced regulatory burden. It is unclear what the agency means by the term, "the sole provider of banking services" and whether the term encompasses types of financial institutions besides banks. Regardless of how the term "community bank" is defined, we do not believe that status alone as a community bank should qualify an institution for reduced regulatory requirements.

We believe statutory regulatory relief is sorely needed and should take into consideration institutions' cumulative regulatory burden, resources for compliance, as well as the protection of consumers' interests.

OCC Should Not Weaken the Notice Requirements for Branching Applications

The OCC is soliciting comments on whether a community bank seeking to branch could simply post a notice in its main office and existing branches instead of providing a notice in a general circulation newspaper in the community in which the bank proposes to branch. The Advance Notice indicates that the notice must be "conspicuous" but does not describe what that would require in terms of location within the main office or branch, typeface or language of the notice, its size or other attributes.

However, our real concern about this proposal is that it would substantially decrease, if not eliminate for many consumers in the proposed area, the ability to know about the bank's branch application. We believe prior notice to consumers regarding a potential bank branch is critical, and their ability to have such notice should not be sacrificed to satisfy banks' claims of regulatory burden.

OCC's Simplification of PCA Could Be Useful to NCUA

The Advance Notice asks commenters to suggest "a different, simpler overall approach to measuring capital adequacy for community banks." It is unclear what the agency intends. However, we are encouraged that the OCC will develop an approach to PCA that the National Credit Union Administration might be able to utilize in a modified form to provide credit unions relief in this area.

In closing, thank you again for the opportunity to express our views on the Advance Notice regarding the paperwork burden of community banks. If you have any questions about our comments, please do not hesitate to call CUNA's General Counsel Eric Richard or Associate General Counsel Mary Dunn at 202-682-4200.


Daniel A. Mica
CUNA President and CEO


Senate Banking Committee Chairman Phil Gramm
Senate Banking Committee Ranking Member Paul Sarbanes
House Banking Committee Chairman Jim Leach
House Banking Committee Ranking Member John LaFalce
NCUA Board
CUNA Board of Directors
CUNA Governmental Affairs Committee