The American Bankers Association (ABA) recently took the opportunity to respond to a request from the Federal Deposit Insurance Corp. (FDIC) on a proposed framework the agency is considering to analyze its regulatory effect.
The trade association outlined five general principals in its letter to the FDIC to increase the transparency of the agency’s rulemaking process.
The ABA also urged the FDIC to detail and clarify any changes to bank recordkeeping and reporting requirements when proposing new regulations, and undertake voluntary data collections and impact analyses prior to finalizing a major rule.
In the FDIC’s request for information, it said it was considering including the following in its rulemaking actions:
- A statement of the need for the proposed action;
- The identification of a baseline against which the effects of the action are compared;
- The identification of alternative regulatory approaches; and
- An evaluation of the benefits and costs, from all major stakeholder perspectives, that includes qualitative discussion and quantitative analysis where relevant and practicable, of the proposed action and the main alternatives identified by the analysis. Moreover, the analysis should be transparent about its assumptions and significant uncertainties.
ABA said in its letter that it appreciated the intention to be more transparent in rulemaking. It began by offering the idea that the FDIC conduct a holistic review of existing regulations before proposing and finalizing regulations.
“Specifically, there should be a review of current statutory and regulatory provisions to avoid duplication, together with an analysis as to whether the proposed action is consistent with the current state of affairs,” the letter stated.
ABA suggested that impact assessments should consider the industry along with customers, markets and the economy. It also cited the need for a “careful review” to accurately ascertain costs to banks of new rules.
“The FDIC could consult with core processors and other third-party providers that provide system modifications to ask them about implementation costs,” the letter stated. “Likewise, the FDIC could conduct interviews with key representative banks about the costs of regulation to understand better the impacts on banks of various sizes and business models.”
The association said that any proposed initiative should detail and clarify additions or changes to current recordkeeping and reporting requirements. And finally, ABA said it was “imperative” that the FDIC and other agencies undertake voluntary data collections and impact analyses.
“The agencies have often relied on the Basel Committee on Banking Supervision’s quantitative impact study (QIS) process to assess the impact of new rulemakings based on international standards. However, the Basel Committee’s QIS process is not an adequate substitute for the agencies conducting a rigorous U.S. specific empirical study of their proposals,” the letter stated. “A Basel QIS aggregates data from a relatively small sample of international banks and may not capture the relevant scope of a U.S. rulemaking. Moreover, even if the scope of a proposed rulemaking is limited to those institutions that participate in a QIS, the international QIS process has become less relevant to the U.S. banking industry. … The divergences mean that the agencies can no longer rely on the Basel Committee’s QIS process to determine the U.S. bank capital framework.”