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SMALL BUSINESS AND SMALL FARM LOAN INFORMATION COLLECTION WILL HIKE COMMUNITY BANKS' OPERATING COSTS

SMALL BUSINESS AND SMALL FARM LOAN INFORMATION COLLECTION WILL HIKE
 COMMUNITY BANKS' OPERATING COSTS
 WASHINGTON, June 18 /PRNewswire/ -- A federal regulatory proposal requiring banks to track information on loans to small businesses and small farms will significantly increase operating costs for community banks, the Independent Bankers Association of America (IBAA) said today.
 IBAA President Bob Hawkins, chairman of Southern Commercial Bank in St. Louis, noted in a comment letter to the Federal Financial Institutions Examination Council (FFIEC) that the agency's proposal "imposes regulatory burdens that are unacceptable to community banks."
 Hawkins noted that the regulatory proposal goes far beyond the original intent of Congress by requiring all banks to collect information. "The legislative history indicates that banks with less than $100 million in assets be exempted," he said. "Now it is those institutions that will bear most of the burden." IBAA recommended that FFIEC re-examine its proposal, with consideration to the burden it imposes on the nation's small community banks.
 Hawkins also noted that banks will incur significant costs in complying with the regulatory proposal, since the required information is presently unavailable on bank automation systems or collected in manual loan record-keeping systems.
 "The proposal requires tremendous dedication of staff time to review loan files, determine sales levels, personally contact the borrowers and establish internal control measures," Hawkins said. "To implement the program requires manually sorting through virtually all the commercial loan files and agricultural loan files. This amounts to hundreds of hours in loan officer and staff support time that could be better spent on evaluating borrowers and working with the community. This is particularly problematic for small banks that have only one or two loan officers on staff."
 The costs to implement the regulatory proposal and the costs to sustain information collection into perpetuity amount to hundreds of thousands of dollars per bank and millions of dollars to the banking industry, Hawkins said.
 IBAA is the only national trade association that exclusively represents the interests of the nation's community banks.
 -0- 6/18/92
 /CONTACT: Marti Sworobuk of the Independent Bankers Association of America, 202-659-8111/ CO: Independent Bankers Association of America ST: District of Columbia IN: FIN SU:


KD -- DC015 -- 1576 06/18/92 14:46 EDT
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Publication:PR Newswire
Date:Jun 18, 1992
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