WASHINGTON - Mixed messages are emanating from Capitol Hill on whether banks and their regulators are doing enough to help stop money laundering and the financing of terrorists.
Some House Financial Services Committee members used a hearing Wednesday on small-bank deregulation to question whether Bank Secrecy Act reporting requirements are too strict and whether the government is making good use of the data.
Rep. Scott Garrett, R-N.J., asked officials from the Treasury Department and the Federal Deposit Insurance Corp., "Is there any consideration to raising the $10,000" trigger for banks to file a currency transaction report "to a more realistic, higher number like $20,000 or $30,000?"
"That is a question we are asking," replied Wayne Abernathy, the Treasury assistant secretary for financial institutions. He said he did not think "it should be a static number."
FDIC Vice Chairman John Reich said regulators may make changes to the reporting requirements by yearend.
The tone of lawmakers and regulators was markedly different at two recent Senate Banking Committee hearings, where senators slammed regulators for not doing enough to enforce money-laundering laws, and questioned if noncompliance is endemic in the industry.
The House hearing on Wednesday was designed to lay the groundwork for future legislation that would reduce red tape for small banks to help them compete with larger banks and credit unions.
"The volume and complexity of existing banking regulations, coupled with new laws and regulations, may ultimately threaten the survival of our community banks," Mr. Reich told a generally receptive financial institutions subcommittee.
He said one solution might be to create a two-tiered regulatory system. "We need to look for possible exemptions for community banks from the application of certain laws," he said in written testimony. "We also need to look for ways to reduce the number of reports that community banks must file and reduce the complexity of the information demanded from these banks."
Mr. Abernathy said Congress could help small banks by repealing the ban on paying interest on corporate checking accounts. He also praised a proposal by regulators to streamline Community Reinvestment Act exam requirements for banks with less than $500 million of assets. Mr. Reich said he supported legislation to raise that threshold to $1 billion.
