Training Bankers to Comment

There is this thing called the Administrative Procedures Act. It is a compliance law for federal agencies, including the bank regulatory agencies. Among other interesting things, it requires a federal agency to publish rulemaking proposals so that the public has an opportunity to comment on the merits of the proposal. This public comment period is the opportunity to be heard in ways that will affect the shape and content of the final rule.

After the comment period ends, the rulemaking agency must read all the comments, consider them, and take them into account in issuing the final rule. In short, this process, the opportunity to comment, is a form of power. It is the power to have one's say. It is the power to influence. It is potentially the power to make regulatory burden more bearable. To reverse an old saying, if the regulation is a shoe you are going to have to wear, you might as well make it fit!

But when agencies issue proposals, financial institutions sit back and wait. They get very quiet. Later, after the rule is issued in final, they will be heard loudly moaning about regulatory burden. But now, when there is opportunity to affect the outcome, institutions are silent.

There are lots of justifications for this silence. One of the all-time best excuses is that the institution is saving time. Why, after all, spend time reading and analyzing a proposal that may change? And we have plenty to do already. Why not make better use of the time and wait until the rule is final? Better use of time? Really! This isn't saving time. This is walking around wearing a sign that says "hit me!"

Last year, the OCC published an Advance Notice of Proposed Rulemaking ("ANPR"). This ANPR solicited comment on what the OCC should do to support electronic activities for and by banks while preserving safety and soundness. Clearly, this rulemaking process could have a decisive impact on the banking industry's ability to evolve with technology.

Given the number of institutions that now have or are planning to have websites and provide electronic banking services, you would think defining the activities that may undertaken in the electronic world would be a hot issue.

So, how many banks actually sent comments to the OCC? It was a whopping great seven! Only seven banks took the time to care about their future. Only seven banks took the time to say anything. The rest of you sat back and let the process move by itself.

Now here is the real issue. How many of the banks that said nothing and let the opportunity for comment pass by will be among those complaining about the final rule? How many of those once silent banks join the chorus of complaints about regulatory burden.

This is what so frustrates the rulewriters. Banks complain loudly about regulatory burden. But they don't take constructive steps to lessen the burden. The really useful time to reduce burden is before the rule becomes final. This means taking full advantage of the comment period.

The information that banks have to offer during a rulemaking process is invaluable. Banks have first hand experience with how things can or do get done. They have information on costs - including the cost of change. Banks have their hands on what bank employees can and cannot accomplish. By not commenting, banks withhold this information from the rulemakers. By commenting, banks influence their future and contribute to a rule or set of rules that are viable.

Well, folks, when it comes to electronic banking, this is your last chance. Put up or...You have until August 31, 2001 to get your comments to the OCC. Do it!

Copyright © 2001 Compliance Action. Originally appeared in Compliance Action, Vol. 6, No. 8, 8/01