Regulatory paperwork continues to occupy far too many community bank resources that could be dedicated to improving local communities, and the problem is only getting worse. A new ICBA survey spotlights the tangible impact of one of the more onerous burdens that is only getting heavier—the quarterly call report.
While regulators are proposing to yet again expand call report requirements for all banks, ICBA’s new survey details the impact of existing reporting rules.
The 2014 ICBA Community Bank Call Report Burden Survey found that the annual cost of preparing the call report has increased for 86 percent of respondents over the past 10 years. Meanwhile, the total hours dedicated to preparing the call report increased for 73 percent of respondents. Further, one in three survey respondents said the number of employees involved in call report preparation has increased, with more than 60 percent saying they have at least two employees who prepare their report.
Why the increasing time and expense? Here’s a reason—the call report has grown from 18 pages in 1986 to 29 pages in 2003 to nearly 80 pages today! The instructions alone are 630 pages, and regulators are considering padding that with another 57. In fact, the call report—which community banks have to submit every 65 business days—has more pages than the typical U.S. community bank has employees.
Make no mistake—the additional staff time and resources that community banks devote to the call report are resources that cannot be used to expand our economy. That is why ICBA is proposing a simpler and more streamlined approach for smaller and less complex banks.
Instead of continuing to add to the paperwork overload, we propose that regulators allow highly rated, well-capitalized community banks to file a short-form call report twice per year. This report would cover the first and third quarters of the year, with community banks continuing to submit the usual long-form call report during the second and fourth quarters.
Think it will help? Community bankers sure do. According to our call report survey, 98 percent of respondents said the short-form call report would reduce their regulatory burden, and 72 percent said the reduction would be substantial.
Look, enough is enough. The truth is that new regulatory burdens detract from the ability of community banks to serve their communities. Instead of tying up local institutions in knots of red tape, let’s free their hand and allow them to promote the sustainable economic growth our nation desperately needs.