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Derr-Castiglione: FDIC should help banks manage compliance burden

150px-US-FDIC-Logo.svgNancy Derr-Castiglione, the owner of D-C Compliance Services, an independent regulatory compliance consulting firm, recently said that the FDIC should help banks it oversees to manage the compliance burden resulting from a slew of federal regulations.

The FDIC published its Community Bank Study in December examining the challenges facing community banks, including capital standards, financial performance and changes in structure. Bankers in the survey indicated that no single regulation has had a significant impact on their institutions but added that the cumulative effect of regulations, including the Home Mortgage Disclosure Act, UDAP, the Fair Lending Act, the Bank Secrecy Act, the U.S.A. Patriot Act, the Electronic Funds Transfer Act and the Privacy Act, has created the compliance burden, according to ABA Banking Journal.

Many of the bankers also indicated that they have begun to rely on third-party service providers and consultants to manage the compliance burden. Derr-Castiglione said that the FDIC should also help banks manage compliance.

“[The] FDIC should assist banks it supervises to gain a better understanding of the new and changing regulations and how to maintain a satisfactory level of compliance,” Derr-Castiglione said, ABA Banking Journal reports.

Additionally, the compliance costs reported by the bankers involved in the study involved only direct costs, such as compliance department expenses. The bankers said that examining the overall cost of compliance would be too time-consuming and costly because regulations extend to all facets of an institution’s operations.

“What the study ultimately underscores is this: Banks know they are spending much more on compliance, but accurately measuring the total impact on expenses with specificity is difficult,” Derr-Castiglione said, according to ABA Banking Journal. “What is needed is more information about the costs of compliance. Easy to say and hard to quantify.”

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