WASHINGTON -- The banking industry spent $10.7 billion complying with government regulations last year - an amount equal to 59% of total profits - according to the final results of a survey by the American Bankers Association.

The estimate, which is 10 times higher than the trade group's last official projection, will become the cornerstone of a campaign to persuade Congress and regulators to cut back on red tape.

The association will argue that excessive regulation is hurting profitability and restraining banks' ability to lend.

The survey was mailed to 10,000 banks and completed by 1,000. The association admits that the study was not scientific, but said the 10% response rate makes it confident of the results.

Salaries and benefits for compliance staffers, at $1.6 billion, accounted for 15% of the total price tag. The cost of outside consultants and lawyers was $1.4 billion. Employee training was put at $1 billion and training materials at $700 million.

Indirect costs, at $5.9 billion, made up more than half of the total. These include computer usage, personnel not on the compliance staff, postage, printing, and telephone bills.

The $10.7 billion figure does not include the "several billion dollars" of regulatory burden expected to stem from the banking law enacted last December, edward Yingling, ABA's executive director of legislative affairs, noted at a press conference Wednesday.

Two weeks ago, the ABA released preliminary results showing that the costs of compliance personnel and outside specialists alone were $3 billion last year. The industry's total earnings last year were $18.6 billion.

Main Planks of Platform

The trade group will try to convince lawmakers of three points, Mr. Yingling said:

* Consumers are paying for bank regulation because institutions pass on some compliance costs.

* The economy suffers because every $1 a bank spends following government rules cuts $8 to $12 from the amount it is able to lend.

* Nonbank competitors, offering the same products, should be subject to the same mountains of regulation that apply to banks.

This last argument is the industry's strongest, Federal Deposit Insurance Corp. Chairman William Taylor said in an interview Wednesday.

"If the regulation is needed, it is needed across the board," he said. Mutual funds, nonbank lenders, and "all the people that have in effect poached on the banking franchise"should have to comply with the same rules banks do.

Mr. Taylor, who heads an interagency task force on regulatory reform, said ABA had sent him a copy of its survey results. He declined comment on the findings because has not had a chance to review them.

Big Savings Seen

The promise of more credit -- fuel for an economic recovery -- seems to be the ABA's lobbying tool of choice.

A 25% cutback in regulation could free some $30 billion in new loans, Mr. Yingling estimated.

The ABA expects to have a regulatory reform bill introduced in Congress in the next two weeks.

The group, in conjunction with the state banking associations, will begin a grass-roots effort in July to explain the effects of banking legislation to lawmakers. That campaign will carry over to 1993 when ABA thinks it has the best shot of getting a bill passed.

Pricey CRA Component

Analysts did not want to comment on the group's figures without seeing how the association arrived at its conclusions. But Dick Stillinger, a senior vice president at Keefe Bruyette & Woods in New York, said: "The cost of regulation is really getting out of hand."

Also excluded from the total is the $5.2 billion banks paid the Federal Deposit Insurance Corp. in insurance premiums in 1991 and the $1.6 billion in interest income banks could have earned on their $22 billion in reserves held at the Federal Reserve.

The Community Reinvestment Act leads the list of the most costly regulations, according to ABA's findings. Call reports, on-site exams, truth-in-lending rules, and insider lending restrictions ranked next.

The regulatory burden hits small banks hardest, ABA concluded. And it was predominantly small banks that filled out ABA's survey. Of the 974 responses, just 21 came from banks with more than $1 billion in assets.

More than 700 responses were sent in from banks with less than $100 million in assets. Bankers in the Midwest accounted for 38% of the survey returns.

ABA is working on series of recommendations for reducing regulatory costs including exempting small banks from the Community Reinvestment Act and preventing CRA challenges against larger banks with compliance ratings of satisfactory or better.

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