Bankers last week blasted the Federal Reserve Board's fifth shot at changing the way annual percentage yields are calculated under Truth-in- Savings.

Almost all of the 89 commenters opposed any change to the calculation, saying the proposal is not only mathematically incorrect, but would cost the industry millions of dollars.

The Fed itself estimates the Truth-in-Savings change would balloon compliance costs by $200 million. Industry experts attribute that number to the expense of retraining employees and changing software systems and disclosures.

Most of the letters said the proposal is a perfect example of how much the industry is overregulated and how little the agencies listen to banks.

"It is obvious that the Federal Reserve Bank will do what they want to do despite comments to the contrary," said Mark Clary, compliance manager at Bankers' Service Corp., Madison, Wis.

The proposal - in a slightly different form - has already been opposed by 98% of those who wrote in during the last comment period.

The new calculation would reflect both the effect of compounding and the value of receiving interest during the term of an account.

In January, it looked like the Fed had finally decided how to calculate the yield after debating the issue since December 1993. The central bank voted to adopt a formula that treats accounts that pay interest periodically as if the interest had been left in the account and compounded. That calculation was slightly different than any that had been officially proposed.

Seven trade groups representing banks and thrifts opposed the decision, saying it wasn't legal for the Fed to adopt a final rule that hadn't officially been put out for public comment.

The central bank then made the unusual move of reversing the decision, and put the formula out for public comment, along with a previously proposed alternative that would also take into account the time value of money.

The bankers that commented last week were weighing in on those proposals. An interim rule that allows banks to disclose the simple interest rate as the annual percentage yield is in effect until the Fed settles on a final rule.

Joseph Wachtel, president of Monitor Bank, Big Prairie, Ohio, voiced the most common protest in the comments. "Nobody has asked for these changes and nearly everyone has requested that you don't adopt them . . . what part of no don't you understand?" Mr. Wachtel said.

Many bankers are frustrated.

"What a waste," said Robyn Batson, vice president of Bank and Trust, Broken Bow, Okla. "The dollars in time and publication for comments, notification, and now nullification only substantiates the concern many have with government efficiency."

Commenters said the proposal actually contradicts the purpose of Truth- in-Savings, which is to help consumers compare returns on deposit accounts.

"The benefits to the consumer are negligible, and there is opportunity for harm as a result of confusion by both the consumers and the bankers that would deal with the changes," said Andrew Craig, chief executive of Boatmen's Bancshares, St. Louis.

The letters are strewn with bankers' attempts to compute the proposed yield. Many said the Fed's math is simply wrong.

Others said the change wouldn't work because of how the interest would be compounded.

Wayne A. Hulting, senior vice president of the Farmers National Bank of Genesco, Ill., said the proposal assumes that a customer would reinvest his monthly interest check at a rate equal to the stated rate on his certificate of deposit. "My experience tells me that the odds of that being true are very unlikely," Mr. Hulting said.

Philip McMahan, executive vice president of First National Bank, Altus, Okla., said the proposal would reduce how often he could allow customers to withdraw or capitalize interest.

"Under no circumstances would the proposed Jan. 4 decision be workable," Mr. McMahan said.

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