WASHINGTON - Angry bankers have bombarded the Federal Reserve Board with more than 1,500 letters protesting tougher disclosure requirements on deposit services.

The response may be the second heaviest the Fed has ever received to a proposals, officials said.

But the protest may be in vain. The central bank has little leeway to change its proposal, called Regulation DD, which would enforce the Truth in Savings provisions of the 1991 banking law. The Fed must adopt final rules by Sept. 19 and implement them by March 19, 1993.

Extensive Disclosure

The law mandates extensive disclosure of yields, fees, and penalties on interest-bearing deposit accounts. It also would require many banks to change the way they calculate interest and advertise the rates.

The respondents complained that the changes will be costly, burdensome, and of little use to the consumers they were meant to protect.

Bankers are angry because "the overwhelming majority [of them] have never heard any complaints in this area," said JoAnn S. Barefoot, president of Barefoot, Marrinan & Associates, a consulting firm in Columbus, Ohio.

The industry views Truth in Savings as "an invention of people in Washington to create protections that the public doesn't really need or value," said Ms. Barefoot, a compliance expert who formerly worked for the Office of the Comptroller of the Currency.

Advance Notice on Rates

Drawing the most fire was a requirement for banks to give customers 30 days's advance notice of changes in rates paid on deposits.

"Think this through with me," wrote H. Dane Grant, president and chief executive officer of Lone Star Bank, Houston. "What is helpful about a 30-day advance notice on a 45-day maturing CD?"

Numerous commenters urged the Fed to shorten the notice period at least on deposits with shorter maturities.

Exception to Rule Explored

A Fed official said in a telephone interview that "the statute is pretty specific" about the 30-day rule, but the agency is exploring whether it can craft an exception.

The notice rule "will cost my $16 million [-asset] bank approximately $30,000 to comply," or one-sixth of its net income, wrote Robert B. Benton, president of the Community Bank, Shell Knob, Mo.

"Our customers simply do not read these disclosures and, if they do, most don't understand them," said David K. Smith, senior vice president of Union State Bank, Arkansas, Kan.

Qualifying Test

One banker offered a novel suggestion: "Develop a standard written examination the consumer must pass before they can take advantage of any banking service," wrote Roger A. Bohm, senior vice president at First State Bank of Joplin, Mo. "Let's find out if they've been reading all of this material we've been handing them over the years."

Some commenters acknowledged that the Fed is straitjacketed by Congress.

"The law is absurd, but unfortunately regulations have to be written for it," wrote Donald E. Blaha, president of First National Bank in Ord, Neb.

"Individuals responsible for this |legislation' must have IQs resembling those of grasshoppers," wrote Lee Teetes, president of City National Bank of Sulphur Springs, Tex.

A New Industry

"Please go back to the drawing board," urged Guy T. Williams, president of Gulf Coast Bank and Trust Co., New Orleans. He said adopting the rule would line the pockets of consultants, computer companies, paper suppliers, lawyers, and banks' Wall Street competitors.

"Banks must reduce the yield on savings or charge more for loans to cover this added expense," wrote Dick Shoenig, vice president, Liberty Trust and Savings Bank, Durant, Iowa. "How does this benefit the customer or the bank?"

A |Reasonable Attempt'

The comments were not uniformly negative. John S. Burnett, vice president of Cape Cod Bank and Trust Co., South Yarmouth, Mass., called the proposal a "reasonable attempt" to improve disclosures while minimizing the burden on depository institutions.

But a handful of consumers complained the proposals isn't tough enough.

Richard Rivette of Winter Haven, Fla., urged regulators to require depository institutions to disclose interest rates to five decimal places rather than two.

The three-month comment period officially ended June 10, but letters are still coming in, officials said. The total, which topped 1,500 this week, is believed to be the second-largest ever. Last year 2,845 letters were filed about a proposal to overhaul real estate appraisal requirements.

An 1988 proposal to speed customer access to deposited funds drew about 1,100 comments.

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