Daniel K Tarullo: Opening remarks at the Economic Growth and
Regulatory Paperwork Reduction Act Outreach Meeting
Opening remarks by Mr Daniel K Tarullo, Member of the Board of Governors of the Federal
Reserve System, at the Economic Growth and Regulatory Paperwork Reduction Act Outreach
Meeting, Arlington, Virginia, 2 December 2015.
* * *
On behalf of the Federal Reserve Board, let me join my colleagues from the other bank
regulatory agencies in welcoming you to this sixth and final outreach meeting being held as
part of the interagency review process under the Economic Growth and Regulatory Paperwork
Reduction Act (EGRPRA). As you know, EGRPRA requires the federal banking agencies to
conduct a decennial joint review of our regulations to identify those that are outdated,
unnecessary, or unduly burdensome.
At the third outreach meeting this past spring, I suggested that we could regard the EGRPRA
review as a success only if it leads to significant reduction in regulatory burden for smaller
banks. Over the course of this year, there has been a wide range of comments on a wide range
of regulatory practices. But many have been concentrated in what are obviously a few key
areas of concern to smaller banks. These include simplifying the regulatory capital rules for
smaller community banks; modifying the information collected by Consolidated Reports of
Condition and Income, the so-called "Call Report"; and updating certain regulations and
supervisory practices under the Community Reinvestment Act to reflect current banking
practices.
First, many commenters have urged a change regarding the application of the Basel III capital
requirements to community banks. They have argued that simpler capital rules are needed to
reduce the compliance burden for smaller institutions because it is disproportionate to the
benefits of the framework's increased risk sensitivity. The greater detail of the Basel III
framework requires a degree of categorization, recordkeeping, and reporting that can be
particularly costly for smaller community banks. As I have publicly stated before, I believe that
it is possible to develop a simpler set of capital requirements for smaller banks that will be
consistent both with the safety and soundness aims of prudential regulation and with our
statutory obligations such as the Collins Amendment.
Second, commenters have called for changes to the Call Report. The Call Report is filed
quarterly and used by regulators to monitor the safety and soundness, performance, and risk
profile of each institution and to assess the condition of the banking system. Many of the
comments have advocated modifying the types and amounts of information collected by the
report for community banks to align more closely with the relatively straightforward business
models of these firms.
Here, I am pleased to say, the federal banking agencies have not waited for the end of the
EGRPRA comment process to respond. In September, we published proposals that would
streamline and simplify regulatory reporting requirements for community banks arising from
the Call Report. These proposals, published under the auspices of the Federal Financial
Institutions Examination Council, would eliminate or revise several Call Report data items. The
proposals complement other efforts aimed at lessening burden associated with the Call Report.
These efforts include accelerating the start of a statutorily required review of the
appropriateness of the data items collected by the Call Report, evaluating the feasibility and
merits of creating a streamlined version of the Call Report for community banks, and holding
teleconferences and webinars to explain reporting requirements and any upcoming changes.
As we complete the EGRPRA review process, we will certainly consider other opportunities for
change.
Third, commenters have made recommendations as to how regulations and supervisory
practices implementing the Community Reinvestment Act should be modernized to reflect the
ways that banking services are now being provided and that banks are interacting with the
communities they serve. Some commenters have requested that the regulations' asset
thresholds, which are used to determine the examination method for banks of different sizes,
be raised. Others have asked for cost-saving procedural changes, such as updating the
requirement to maintain hard copies of a bank's public file so as to reflect changes in
technology. Here again, I believe there should be ways the federal banking agencies can be
responsive to this set of concerns.
As this is the last outreach meeting of this EGRPRA process, I think it useful to add that we
are committed to a systematic analysis and consideration of all the comments that we receive.
This will allow us to prioritize recommendations and act as quickly as possible to adopt them.
It is in that spirit of creating priorities for action that I identified those three areas that have
commanded attention from so many commenters.
Thank you again for your participation in today's session. I look forward to hearing your views.