United States General Accounting Office

GAO Report to Congressional Committees

March 1997 BANK DATA

Material Loss of

Oversight Information

From Interstate

Banking Is Unlikely

GAO/GGD-97-49

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-260655 

March 26, 1997

The Honorable Alfonse M. D’Amato

Chairman

The Honorable Paul S. Sarbanes

Ranking Minority Member

Committee on Banking, Housing, and

 Urban Affairs

United States Senate

The Honorable James Leach

Chairman

The Honorable Henry B. Gonzalez

Ranking Minority Member

Committee on Banking and Financial Services

House of Representatives

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994

(Riegle-Neal) authorizes interstate mergers between banks beginning

June 1, 1997, regardless of whether the transaction would be prohibited by

state law.1

 In addition, Riegle-Neal also provided that banks may branch

across state lines if the host state has a law permitting the establishment

or acquisition of branches by out-of-state banks. Interstate mergers

between banks and the establishment of interstate branches are allowed

before June 1, 1997, in states having laws that expressly allow such

mergers. Previously, most banks that wanted to operate across state lines

had to establish a bank holding company (BHC) and, with certain

restrictions, acquire or charter a bank in each state in which they wanted

to operate. With the advent of interstate branching, (1) banks that

previously could not expand across state lines may do so and (2) some

multistate BHCs may combine their operations into single banks with

multistate branches.

When Congress passed Riegle-Neal, there was a concern that information

regarding the distribution of bank deposits and loans by state would be

lost. As a result, Congress mandated that we determine whether

implementation of the act would result in a material loss of information

that is important for federal bank regulation and oversight. Specifically,

and in accordance with our responsibilities under section 112 of the act,

our objectives in preparing this report were to (1) examine how the

interstate branching provisions of Riegle-Neal are likely to affect the

1

Riegle-Neal gives states the right to opt out of this arrangement if they pass legislation prohibiting

merger transactions with out-of-state banks before June 1, 1997.

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usefulness of the deposit and loan data collected and reported to federal

regulators by the banking industry under statutory and regulatory

requirements and (2) determine whether modifications to such data

requirements would help to ensure that the implementation of the act’s

interstate branching provisions does not result in a material loss of

information important to regulatory and congressional oversight of banks.

Our analysis was limited to identifying information reported to regulators

that would potentially be lost as a result of the implementation of

Riegle-Neal.

Background Oversight of federally insured state-chartered banks is provided by state

bank regulators and either the Federal Reserve System—for banks that are

members of the Federal Reserve—or the Federal Deposit Insurance

Corporation (FDIC)—for other state-chartered banks. National bank

oversight is provided by the Office of the Comptroller of the Currency

(OCC). As the deposit insurer, FDIC has back-up oversight authority for all

FDIC-insured banks. This authority allows FDIC to examine potentially

troubled institutions and take enforcement actions, even when it is not the

institution’s primary regulator. In addition to its authority over

state-chartered member banks, the Federal Reserve oversees all BHCs.

In accordance with a variety of federal laws and regulations, banks

routinely provide federal bank regulators with reports containing

information about their deposit and lending activities. These reports

include the following:

• a quarterly financial report (call report), which is submitted to the primary

federal bank regulator;

• an annual independent audit report (for banks with $500 million or more

in assets), which is submitted to FDIC and relevant federal and state bank

regulators;

• an annual summary of deposits report for each branch, which is submitted

to FDIC;

• a statement of amounts required to be held as reserves, which is submitted

to the Federal Reserve; and

• an annual report on home mortgage lending (for banks that originate,

purchase, or receive applications for home purchase and home

improvement loans and that have assets greater than $28 million in 1997),

which is submitted to the bank’s primary federal regulator.

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In addition, as of January 1997, revisions to the Community Reinvestment

Act (CRA)2

 interagency regulations require banks that have assets of

$250 million or more, or banks that are affiliates of a BHC with assets of

$1 billion or more, to report to their regulators some new data. These

banks are required to annually report, by geographic location, the

aggregate number and aggregate amount of small business and small farm

lending loans originated or purchased, and the aggregate number and

aggregate amount of community development loans originated or

purchased. BHCs are also required to submit to the Federal Reserve

quarterly financial reports (Y-9 reports) on the consolidated activities of

their bank and nonbank subsidiaries.

Federal bank regulators, along with other agencies, typically use the

lending and deposit information gathered in these reports and special

purpose reviews to carry out their oversight responsibilities. Congress gets

information through a variety of means, including directly from bank

regulators and also from the legislative support agencies including us, the

Congressional Research Service (CRS), and the Congressional Budget

Office (CBO). These support agencies, in turn, use the information gathered

in these banking reports, along with other sources, to do various analyses

for Congress.

Parties other than federal regulators, such as industry analysts and

community organizations, may also use call reports and Y-9 reports (both

of which are publicly available) to produce state, regional, and national

summaries of the types and overall dollar amounts of loans and deposits

held by banks and BHCs. These parties also frequently use home

mortgage-related lending reports to assess the availability of credit to

various groups within a geographical area, such as a state. Because a state

was the largest area within which a bank could expand, information

collected at the bank level has been used by such parties to approximate

bank loan and deposit activity within a state.

Results in Brief To the extent that interstate branching becomes prevalent, call report

data—as currently collected and reported—will become less useful for

approximating bank loan and deposit activity within a state. As BHCs

consolidate by merging multistate banking operations and as banks

2

CRA requires each federal bank or thrift regulator to (1) assess an institution’s record of helping to

meet the credit needs in all areas of the community that the institution is chartered to serve, which is

consistent with safe and sound operation of the institution, and (2) take this record into account in the

agency’s evaluation of an application for a deposit facility by the institution.

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expand across state lines by opening or acquiring branches, call report

information reported at the bank level will increasingly encompass the

loans and deposits from more than one state. However, accurately

measuring loan and deposit activity by state was subject to limitations

even before Riegle-Neal. BHCs had already begun establishing interstate

operations and creating regional booking centers for some of their

activities and national markets have developed for certain bank products.

Compared with the information that existed before it was enacted, the

implementation of Riegle-Neal is unlikely to result in a material loss of

information necessary to perform regulatory and congressional oversight

for three reasons. First, as previously mentioned, the usefulness of call

report data to approximate bank loan or deposit activities within a state

was already somewhat limited and has become increasingly so, but only in

part due to Riegle-Neal. Second, sources of information collected at the

branch level or by geographic location should not be affected by interstate

branching. For example, summary of deposits data should still be available

to measure deposit activities that are booked in a particular state, although

these data will not provide information on the geographic source of those

deposits. Also, home mortgage loan data should be available as an

indicator of mortgage loan activity in a geographic area. Finally, the most

useful and detailed information about bank activities is attained through

examinations. Regulators with primary supervisory responsibility still

have this tool available, although those who rely solely on off-site

information will not. For these reasons, at this time, there does not appear

to be sufficient need to modify regulatory or statutory reporting

requirements.

Objectives, Scope,

and Methodology

To determine what information regulators collect from banks, we

reviewed the laws and regulations pertaining to the requirements for

banks and BHCs to report data on bank activities (focusing on loans and

deposits).3

 These laws and regulations consisted primarily of those

authorizing federal bank regulators to conduct examinations, collect

financial statement data, collect bank deposit information, and encourage

banks to provide credit to the communities in which they operate. In

addition, we obtained regulators’ and others’ views about whether

interstate branching would pose new or different needs for information.

We concentrated our review on information that is currently collected

from banks and BHCs. We did not conduct an independent analysis to

3

We limited our scope to banks since federally chartered thrifts were allowed to branch across state

lines before Riegle-Neal was passed. However, the issues cited in this report, with respect to the

usefulness of bank loan and deposit data, would also apply to thrifts.

Page 4 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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identify all of the information that regulators and Congress may need to

execute their regulatory and oversight responsibilities.

To obtain views on the effect that Riegle-Neal is likely to have on the

usefulness of reported loan and deposit data, we held discussions with

staff members at the Board of Governors of the Federal Reserve System,

the Federal Reserve Bank of Dallas, and headquarters and field offices of

FDIC and OCC. We also spoke with staff members at CBO and CRS in their

roles as users of data for congressional oversight. In addition, we

interviewed representatives of several community organizations (the

National Community Reinvestment Coalition, the Center for Community

Change, and the Association of Community Organizations for Reform

Now). We did not attempt to identify all users of reported loan and deposit

data.

To determine whether there would likely be a material loss of information

important to regulatory and congressional oversight of banks, we

reviewed call, Y-9, Summary of Deposit, Home Mortgage Disclosure Act

(HMDA) loan application register, and required reserve reports collected by

the regulators pursuant to laws and regulations. We also reviewed the loan

and deposit data the regulators make available to us as the investigative

arm of Congress. We then reviewed in greater detail the loan and deposit

information that regulators summarized by state, region, and nationwide.

We conducted our work between March 1994 and November 1996 in

Dallas and Washington, D.C. We provided a draft of this report to the

heads of the Federal Reserve, FDIC, and OCC for their review and comment.

We also provided the community organizations and other parties we

contacted with the opportunity to comment on portions of the draft report

that we attributed to them. The comments we received are discussed and

evaluated on pages 12 to 14, and the written comments are reprinted in

appendixes I and II. Our work was done in accordance with generally

accepted government auditing standards.

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Call Report Data May

Become Less Useful

for Approximating

Bank Activities by

State

Regulators collect a variety of information about bank loan and deposit

activities through reports filed by banks and BHCs. These reporting

requirements were not affected by Riegle-Neal. In table 1, we briefly

describe the loan reports and the information collected from them. Call

reports and Y-9 reports are the primary sources of data that banks and

BHCs provide to regulators. Both reports contain a summary of the entity’s

loan portfolio categorized by type of loan (e.g., real estate or consumer).

The HMDA loan application register4

 and the new CRA report on small

business and small farm lending are to collect data, by geographic

location, on specific categories of bank loans to assist the regulators in

enforcing the federal fair lending laws. Unlike data from call reports and

Y-9 reports, data from these reports are collected to assess a bank’s

compliance with federal fair lending laws and to assess the bank’s

performance in meeting the credit needs of its local community. In

addition, the HMDA data are submitted only by banks engaged in originating

home mortgage loans; banks that merely purchase loans are not required

to submit HMDA data.

Table 1: Reports Containing Information on Bank Loans

Report Loan information Reporting level Recipient Frequency

Call

report

Amounts by type of loan Bank Federal bank

regulators

Quarterly

Y-9

report

Aggregate amounts of all banks in the

BHC, by type of loan and income of

applicant

BHC Federal

Reserve

Quarterly

HMDA loan

application

register

Race, ethnicity, gender, and geographic

location of collateral for home

mortgage-related loan and type of loan

action

Banks with assets greater than

approximately $28 million in 1997 that

originate, purchase, or receive

applications for home purchase and home

improvement loans each calendar year,

and that had an office within a standard

metropolitan statistical area

Federal bank

regulators

Annually

CRA report

(effective 

January 1,

1997)

Geographic location, the aggregate

number and aggregate amount of small

business and small farm loans originated

and purchased and the aggregate

number and amount of community

development loans

Banks with assets of $250 million or more

or banks that are affiliated with a BHC

whose total assets exceed $1 billion

Federal bank

regulators

Annually

Source: GAO analysis of bank reports to and reporting requirements of bank regulators.

4

The HMDA loan application register is the vehicle for collecting data on home mortgage lending as

required by HMDA.

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In table 2, we describe the reports that banks and BHCs use to provide

regulators with information about their deposits. Call reports again

provide the greatest detail about a bank’s total deposits because they

provide a summary of a bank’s total deposits by type (e.g., demand

deposits). The Summary of Deposits report provides the most

comprehensive information on bank deposits by location, but only

provides information on the total bank deposits based on the branch in

which the account is located. Additionally, these data are only collected

yearly. The Required Reserve report provides more limited information on

bank deposits.

Table 2: Reports Containing

Information on Bank Deposits

Report Deposit information

Level of

reporting Recipient Frequency

Call

report

Amounts by type of

deposit

Bank Federal bank

regulators

Quarterly

Y-9

report

Aggregate amounts of

all banks in the BHC,

by type of deposit

BHC Federal

Reserve

Quarterly

Summary of

Deposits

report

Amounts held in each

insured office of a bank

Branch FDIC Annually

Required

Reserve

report

Reserves held by

banks as a result of

reserve requirements

on deposits

Bank Federal

Reserve

Weekly or

quarterly,

depending on

bank size

Source: GAO analysis of bank reports to and reporting requirements of bank regulators.

Data From Call and Y-9

Reports Have Historically

Had Limited Usefulness in

Determining State Banking

Activity

Although regulators and other interested parties have used call report data

to produce state, regional, and national summaries of the types and overall

dollar amounts of loans and deposits held by banks, the data reported

have always had limitations in their ability to provide information about

the geographical location of banking activity. In measuring loan activity,

limitations have existed because the data used to compile call reports do

not explicitly identify the geographic location of the borrower or the

project being funded. As a result, questions exist as to how appropriate it

has ever been to assume that the loans held by a bank were made (1) by a

banking entity located in the same state in which the bank reporting the

loan was chartered or (2) to a party living or doing business in the state

where the bank reporting the loan was chartered. These limitations could

become more apparent and more widespread once Riegle-Neal is

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implemented, since the activities reported by banks with interstate

operations will clearly include activities in a number of states.

According to regulatory officials, loan data reported in the call reports and

Y-9 reports do not represent total bank lending in a particular state or

region for the following reasons:

• A significant percentage of a bank’s mortgage loans are sold in secondary

markets through such entities as the Federal National Mortgage

Association (Fannie Mae) and the Federal Home Loan Mortgage

Corporation (Freddie Mac).

• Banks sometime transfer all, or a portion, of a loan to an affiliated bank or

sell loans to unaffiliated banks. Banks make such transfers to diversify

portfolios and to ensure compliance with legal lending limits. In addition,

some BHCs have their bank subsidiaries transfer all loans of a certain type

to one bank to better serve customers and reduce operating expenses.

• Banks that serve a multistate market (e.g., the metropolitan area of

Washington, D.C.) may directly lend to out-of-state customers.

Therefore, if a study were trying to determine the amount of loans made

by banks to borrowers in a state or region, call report data alone, at least

as currently collected and reported, could not answer the question.

Researchers interested in studying the geographic distribution of loans

noted such limitations before Riegle-Neal was considered. For such

studies, data from the HMDA loan application register, and presumably the

data to be collected on small business and small farm loans, may be more

useful since they provide specific geographic information on borrowers.

However, similar geographic information on a bank’s entire loan portfolio

is not available from these sources.

Call report data on deposits do not identify the location of a bank’s

depositors, much as the loan data does not identify the location of a bank’s

borrowers. The Required Reserve report serves a specific bank oversight

function, as previously described, and is not suited to providing detailed

information about the types of deposits or the location of depositors. The

most detailed information on the location of depositors is provided by the

Summary of Deposits report. This report is the only one that identifies a

bank’s deposits by branch. However, regulators pointed out that even the

Summary of Deposits report contains inherent limitations regarding the

origin of a bank’s deposits. For example, banks may purchase deposits in

the national market; in this case, the reporting branch need not reflect

either the depositor’s home or business location. Therefore, while a

Page 8 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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state-by-state analysis of a bank’s Summary of Deposits report identifies

where deposits exist, it does not necessarily identify the location of the

depositor and, thus, the location from which the funds come. In addition,

unlike call report data, which are collected quarterly, the data in the

Summary of Deposits report are collected yearly.

Interstate Branching Could

Increase the Number of

Banks Reporting Data

From Activities in More

Than One State

To the extent that interstate branching becomes prevalent, the usefulness

of information reported to bank regulators, which is currently used to

compile banking data on a state-by-state basis, would become even more

problematic. If BHCs consolidate their operations by merging multistate

banking operations or if banks expand across state lines by opening or

acquiring branches, call report information would increasingly encompass

the loans and deposits of more than one state. Therefore, although the

data collected will not change, the geographical information content of the

data is likely to become less useful because the data are collected at the

bank level rather than the branch level.

Implementation of

Riegle-Neal Is

Unlikely to Lead to

Material Loss of

Information

While the usefulness of data collected at the bank level to provide

information for state-by-state measures of banking activity—including

monitoring the industry’s geographic concentrations—may be affected by

Riegle-Neal, it is unlikely to have a material effect on federal regulation or

oversight for three reasons. First, as previously mentioned, the data

reported on call reports have always had limitations from the standpoint

of imparting geographic information about bank loans. Second, deposit

data should continue to be provided at the branch level and, with the

limitations noted, should provide some measure of state-by-state banking

activity. Third, the most useful and detailed information about bank

activities is attained through examinations. Regulators with primary

supervisory responsibility still have this tool available, although those who

rely solely on off-site information will not.

Regulators Do Not Rely

Solely on Off-Site

Information in Their

Oversight

Regulators use the information described in the previously mentioned

reports to perform various off-site analyses of banks and BHCs, including

(1) financial statements and financial trends, (2) fair lending practices, and

(3) market concentrations of deposits. Additionally, bank regulators use

call reports and Y-9 reports to assist them in planning, scoping, and

conducting safety and soundness examinations or inspections,

respectively. Data from these reports provide regulators with financial

information about the institutions’ activities and reported financial

Page 9 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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conditions. Analyses of the data provide insights about the institutions

over time and compared with other institutions. To a lesser degree,

regulators use the annual independent audit reports in planning safety and

soundness examinations for those institutions required to have annual

independent audits.

Bank regulators are responsible for assessing compliance with various fair

lending and consumer protection laws, including the CRA, and they rely, in

part, on annual home mortgage-related lending reports to plan, scope, and

conduct their compliance and CRA examinations. Likewise, the new small

business and small farm loan report is likely to be used in those

examinations. The other deposit and reserve reports are not routinely used

by regulators in discharging their examination responsibilities, although

the related information may be made available to them upon request.

These reports are used primarily by FDIC and the Federal Reserve in

monitoring institutions’ deposit and reserve activities to assess insurance

premiums and to determine that banks are maintaining the proper amount

of reserves, respectively.

When considering banks’ applications for mergers and acquisitions, bank

regulators and the Department of Justice also use the various

reports—particularly the Summary of Deposits report and the home

mortgage loan report—to assess any antitrust or fair lending implications.

With respect to their antitrust review, bank regulators and Justice officials

typically look to see if the new banking entity could create an undue

concentration of loan or deposit activities in a particular market, which

could impede fair and open competition among institutions.

Regulatory staff told us that, although the data collected in the various

reports are essential to effective off-site monitoring, regulatory actions are

rarely, if ever, premised solely upon this information. Off-site information

is to be supplemented by on-site examinations or visitations. For example,

call reports, which are the most comprehensive and frequently used

sources of publicly available information, typically provide regulators with

indicators about an institution’s activities and condition. However, the call

reports must be supplemented with more detailed and explicit information

about the institution’s deposits, lending, and other investment activities.

Similarly, the annual home mortgage loan report is used by the bank

regulators as an initial indicator of a bank’s performance under the fair

lending and CRA laws and regulations, but assessments of the bank’s

lending practices involve detailed analyses and generally are

supplemented by on-site examinations. Regulators recognize that call

Page 10 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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reports, as well as the other reports, can only provide indicators of an

institution’s activities and must be supplemented through examinations.

Off-Site Information Has

Been Useful in Identifying

Trends in Industry Activity

While bank supervisors use call report data primarily for planning their

on-site examinations, FDIC staff members told us that they use these data in

their back-up oversight authority. In the past, FDIC staff members have

analyzed call report data to identify patterns or trends in industry activity

or within geographic areas, particularly those that may indicate a problem

that could affect industry stability. Their research is important in

identifying historical patterns or trends that can be used to project or

anticipate potential bank losses, failures, or crises. FDIC staff members

expressed concern that call report data are increasingly becoming less

useful for these purposes as consolidation occurs, and they are concerned

about further deterioration in the data’s usefulness after Riegle-Neal is

implemented. FDIC staff members are considering recommendations to

change the call reports to require banks to report their loan and deposit

activity by state.

Views Are Mixed

Regarding the Need for

More Detailed Bank Data

Representatives from financial institutions and industry trade groups told

us that, on the basis of their past experience, they did not believe that

interstate branching would materially affect the usefulness, for regulation

or oversight purposes, of lending and deposit information currently

collected by federal regulators. Specifically, none of these representatives

thought that interstate branching would necessitate that federal bank

regulators collect additional data to conduct CRA examinations. They

pointed out that Riegle-Neal expands the CRA examination process to

require separate state-by-state written evaluations, including a rating, for

banks with interstate branches. The act also requires that separate written

evaluations, including a rating, be prepared for branches located in

multistate metropolitan areas. Finally, officials at the federal bank

regulatory agencies stated that section 109 of Riegle-Neal requires their

agencies to promulgate uniform regulations by June 1997 that prohibit

banks with interstate branch networks from using their out-of-state

branches simply to operate as deposit production offices (i.e., as offices

that take deposits but do not make loans in their communities). On

March 12, 1997, the agencies released for comment a proposal setting forth

such regulations. Moreover, at least 1 year after a bank establishes or

acquires an interstate branch(es), the appropriate federal banking agency

should determine whether the bank is operating the branch(es) as a

deposit production office.

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Representatives from consumer and community organizations did not

necessarily believe that a material loss of information would result from

interstate banking. However, they stated that to ensure there is no material

loss of information necessary to oversee bank activities in an interstate

branching environment, banks should be required to submit information

on the origin of their loans and deposits. Some representatives suggested

that this requirement should take the form of having banks submit call

report data for each state in which they operate. In general, the

representatives believed that regulators and Congress would better be able

to carry out their regulatory and oversight functions if banks were

required to submit information on loans by branch as they are required to

do for deposits. They also pointed out that such data, by branch, would

make it easier for their groups to monitor bank lending activities. As

previously noted, many of these organizations had expressed similar

concerns about the usefulness of call report data before Riegle-Neal was

even considered because information regarding the geographical

distribution of loans is one of the groups’ particular concerns. Therefore,

the implementation of Riegle-Neal did not give rise to their concern, but

does heighten it.

Agency Comments

and Our Evaluation

We provided a draft of this report to the Chairman of the Board of

Governors, Federal Reserve System; the Chairman of the Federal Deposit

Insurance Corporation; and the Comptroller of the Currency for their

review and comment. We also provided the community organizations we

contacted the opportunity to review and comment on a draft of this report.

The Federal Reserve and the community organizations did not offer any

comments on the draft report. However, the Comptroller of the Currency

provided comments in a letter dated February 6, 1997, and the FDIC

Chairman commented in a January 27, 1997, letter. The comment letters

are reprinted in appendixes I and II.

OCC generally agreed with our conclusions, especially given the call report

limitations we described. OCC stated that it understood the potential value

of more precise geographic information for researching and monitoring

regional trends and the relationship between regional economic

conditions and bank performance. However, OCC also recognized that

reporting is not without its burdens and that proposals to increase

reporting requirements must be considered carefully.

FDIC expressed some concern with the draft report’s conclusion, but did

not disagree that the implementation of Riegle-Neal in and of itself will not

Page 12 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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cause a material loss of information. FDIC pointed out that for the last

decade banks have expanded their lending beyond traditional geographic

boundaries and that, to the extent this trend continues, the usefulness of

institution-level data will continue to erode. FDIC’s primary concern with

our conclusion was that FDIC believes it does not place sufficient emphasis

on the effects that interstate branching will have in accelerating this trend

and eventually leading to what FDIC considers a material loss of

information it uses for statistical and economic studies that assist FDIC in

fulfilling its responsibilities.

FDIC believes that its need for the geographic data being lost is greatest for

large institutions that FDIC insures but does not supervise because these

institutions are more likely to have lending exposures outside of their

home states. Given FDIC’s unique role and responsibility as deposit insurer,

it believes the ongoing loss of geographic data is material to FDIC. In

addition, FDIC believes that call report data are the best source of aggregate

data, while on-site examinations are less useful for this purpose. However,

FDIC acknowledges that, from a cost-benefit perspective, there is a

question about what kinds and how much additional data could be

justifiably collected—either in call reports or other regulatory

reports—that would permit more effective off-site monitoring.

FDIC also suggested that our conclusion was in conflict with our report on

the bank oversight structure5

 because in that report, we encouraged the

use of off-site monitoring to better target and plan on-site examinations.

FDIC believes our position in this current report (i.e., the best

institution-level information is available through on-site investigation)

contradicts our previous position.

We understand why FDIC places more emphasis than other regulators on

the effect Riegle-Neal may have in eroding the geographic content of call

report data, given FDIC’s responsibility to monitor institutions that it does

not directly supervise. As deposit insurer, FDIC may have unique

research-based information needs that other federal bank regulators do

not have. However, while FDIC may need this type of information, we agree

with both FDIC and OCC that this need must be balanced against the

burdens additional reporting requirements could impose on the industry.

Collectively, the bank regulators are in the best position to make such

cost-benefit determinations.

5

Bank Oversight Structure: U.S. and Foreign Experience May Offer Lessons for Modernizing U.S.

Structure (GAO/GGD-97-23, Nov. 20, 1996).

Page 13 GAO/GGD-97-49 Interstate Banking Data Loss Not Material
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We do not believe our position in this report contradicts our earlier

position on the value of off-site monitoring. Off-site monitoring provides

regulators with useful indicators about a bank’s activities and performance

that are generally further analyzed through on-site examinations involving

the review of more specific information. Regulators are not precluded

from requesting information from banks, beyond the information that is

reflected in call reports, to enhance their off-site monitoring as well as

decisions about on-site examinations.

We are sending copies of this report to the Chairman of the Board of

Governors of the Federal Reserve System, the Chairman of the Federal

Deposit Insurance Corporation, the Comptroller of the Currency, other

members of the banking committees, other interested congressional

committees, and other interested parties. We will also make copies

available to others upon request.

This report was prepared under the direction of Mark Gillen, Assistant

Director, Financial Institutions and Markets Issues. Major contributors to

this report are listed in appendix III. If there are any questions about this

report, please contact me at (202) 512-8678.

Thomas J. McCool

Associate Director, Financial

 Institutions and Markets Issues

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Contents

Letter 1

Appendix I 

Comments From the

Comptroller of the

Currency

18

Appendix II 

Comments From the

Federal Deposit

Insurance

Corporation

20

GAO Comment 29

Appendix III 

Major Contributors to

This Report

30

Tables Table 1: Reports Containing Information on Bank Loans 6

Table 2: Reports Containing Information on Bank Deposits 7

Abbreviations

BHC bank holding company

CBO Congressional Budget Office

CRA Community Reinvestment Act

CRS Congressional Research Service

FDIC Federal Deposit Insurance Corporation

HMDA Home Mortgage Disclosure Act

OCC Office of the Comptroller of the Currency

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Appendix I 

Comments From the Comptroller of the

Currency

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Appendix I 

Comments From the Comptroller of the

Currency

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

See comment on

p. 29.

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

Note: The charts on pages

24 to 27 were scanned

from color originals, which

do not produce highquality, black-and-white

copies.

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

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Appendix II 

Comments From the Federal Deposit

Insurance Corporation

The following is GAO’s comment on the Federal Deposit Insurance

Corporation’s letter dated January 27, 1997.

GAO Comment Text was added to eliminate confusion about when FDIC must produce

regulations and make determinations about deposit production offices.

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Appendix III 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Stephen C. Swaim, Assistant Director (Retired)

Rose M. Kushmeider, Senior Economist

Desiree Whipple, Communications Analyst

Dallas Field Office Jeanne Barger, Issue Area Manager

John V. Kelly, Evaluator-in-Charge

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