WASHINGTON - Bankers have had two months to look at regulators' latest plan for measuring interest rate risk, and they're not impressed.

Their main complaint: Gathering the data that the Federal Deposit Insurance Corp., Federal Reserve Board, and the Office of Comptroller of the Currency want banks to submit will take a lot of time and money, but won't really help bankers manage the risks posed by sharp interest rate swings.

"The requirement to report the proposed supervisory model in the call report is an excessive, wasteful expenditure of time and resources using a standardized form that may or may not reflect economic realities of an institution," wrote Ronald E. Bowden, chairman and CEO of Nebraska State Bank of South Sioux City, Neb., in a comment letter to the FDIC.

"It appears the agencies have appreciably more confidence in the reliability of the baseline supervisory model than we believe is warranted," wrote Raymond R. Peters, treasurer and executive vice president of BankAmerica Corp.

"Regulatory efforts to advance interest rate risk measurement are most productively directed toward encouraging further development of internal bank models, not pursuing refinements to the baseline supervisory model."

The "baseline supervisory model" made public by the three agencies in the Aug. 2 Federal Register would use information submitted by a bank to gauge the effect on the bank's "net economic value" of a 200-basis-point rise or fall in interest rates.

Banks would also be encouraged to develop their own rate-risk models, but all banks with more than $300 million in assets - and smaller banks with substantial long-term assets, or Camel ratings of 3 or worse - would, starting in March, have to fill out new interest rate risk forms as part of their quarterly call reports.

This contrasts with the banking agencies' recent proposal on market risk, which would let banks with big trading operations use internal models to calculate their exposure to market shifts - and would not require them to fill out standardized forms.

In the case of interest rate risk, regulators plan to use the call report information starting in 1997 to judge if a bank's potential exposure to interest rate shifts is so high that the bank should be required to hold additional capital to compensate for it.

The FDIC Improvement Act of 1991 required the banking agencies to take interest rate risk into account when measuring capital adequacy. The Office of Thrift Supervision has already done this, but the other agencies have struggled to agree on a way to measure rate risk.

They first published their "supervisory model" in 1993, and were swamped by complaints from bankers that it was too burdensome. The joint policy statement regulators issued in August was meant to address these complaints - and the agencies did get some credit for improving the model.

"The revisions indicated a genuine spirit of openness and cooperation," wrote Brian Smith, director of policy development for America's Community Bankers, which represents thrifts regulated by both the FDIC and the OTS. "ACB believes that the revised proposal establishes a better approach to identifying true 'outliers' that warrant more rigorous reporting requirements and management attention."

On the whole, however, the tone of the 112 comment letters received by the three agencies - especially those from community bankers - was highly critical.

"I cannot believe that you have included our little bank of $81 million to complete the very difficult four additional schedules," wrote Anita J. Taylor, internal auditor of Peoples National Bank of Hayward in Hayward, Wis. "If I understand the process of exemption, we are nonexempt. This does not seem reasonable."

The use of net economic value - which measures the change in the present value of a bank's assets, minus the change in the present value of its liabilities, plus the change in the present value of its off-balance-sheet interest rate positions - also came under fire.

"The proposed use of net economic value ... has relevance if a financial institution is being valued for liquidation purposes," wrote William E. Blackmon, vice president and controller of Auburn Bank in Auburn, Ala. "Everyone knows that the liquidation value of any business will be less than its true value as an ongoing concern."

The comment letters from large banks were more technical and jargon- filled, but essentially came down to this: They believe their internal models measure risk much better than any standardized regulatory model would.

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