Bankers are urging the Federal Deposit Insurance Corp. to make it easier for state-chartered institutions to expand their products and services.
Since 1991, state banks have been barred from activities not permitted national banks, unless they got permission from the FDIC. Current rules require banks to submit an application and wait - sometimes for up to a year - for approval from the FDIC board on a case-by-case basis.
In August, the FDIC proposed speeding up the process by setting up a 60- day fast-track standardized approval process. Decisions to approve or deny applications would be made in the agency's regional offices.
Well-capitalized, well-managed banks that want to make real estate and insurance investments permitted by their home-state regulators would simply notify the FDIC, wait 60 days, and then go ahead, unless the FDIC raised an objection. The proposal does limit how much could be invested as a percentage of the bank's equity capital.
In comment letters due late last month, bank trade groups and state regulators praised the proposal but urged the FDIC to go farther.
Richard M. Whiting, senior director for regulatory affairs and general counsel of the Bankers Roundtable, wrote that "the proposed-notice procedures are extremely detailed and could be simplified."
Mr. Whiting suggested that the FDIC not ask banks to include a business plan and directors' resolution when they apply for approval. Banks should only have to state that such documents exist, he wrote.
He also urged the FDIC to extend the notice process to "other types of activities and investments that do not pose a significant risk."
Gary Bosco, general counsel for the Conference of State Bank Supervisors, agreed.
"The applications process has proved time-consuming, inefficient, and of questionable value and should be eliminated and replaced with notice procedures with respect to all types of investments," Mr. Bosco wrote.
The proposal is "a helpful step in reducing regulatory burden," wrote Leland M. Stenehjem Jr., president of the Independent Bankers Association of America. But he urged the FDIC to cut the notification process to 30 days.
