Richard Kovacevich, president and chief executive of Norwest Corp., recently called on all bankers - from big and small institutions - to unite in a lobbying effort to cut regulations and increase powers.

Here are excerpts from his remarks to a management conference of the Federal Home Loan Bank of Seattle.

Not long ago, I testified before Congress. On the panel with me was a banker from Red Wing, Minn., a town of about 20,000 people on the Mississippi River, just south of Minneapolis. Norwest also has a bank in Red Wing. We compete on the same main street.

What struck me was that we agreed on nearly every major issue. He represented a community bank. I represented a $45.5 billion bank holding company.

Whether you work for a $10 million institution or a $10 billion institution, our industry can rally around several key issues.

Let's take regulatory reform. We're drowning in paper. When bankers tell me ... that their compliance files are thicker than their loan files, you know the industry is in trouble.

False Premises

Congress has aggressively reregulated our industry in the past few years. This is the result of two false premises.

The first is the notion that the ideal for financial service performance is George Bailey, the [thrift owner] character in the movie, "It's a Wonderful Life."

What bothers me about this movie is that George's world was too simple - even 50 years ago. His only competition was the richest man in town. Ours is much more broad and pervasive. But banking's chief regulator, the Federal Reserve, doesn't recognize it. They're stuck in Bedford Falls.

Here's an example. In measuring concentration for allowing in-market bank mergers, the Fed counts only 50% of S&L deposits as competition.

I wonder how many of those of you who run S&Ls consider yourselves half a competitor to the banks in your market?

A Phantom Fear

The second false premise is that the public desperately needs to be protected from the stupidity and deceit of the financial services industry.

[The] Truth-in-Savings provisions of FDICIA required a massive compliance effort on the part of banks all over the country to ensure that every element of communication with current and potential depositors conforms precisely with the requirements of the law.

It takes an enormous amount of time, effort, and paper. But why? Are banks and thrifts deceiving their customers about the terms of the deposit products? Was there a scandal about deposit accounts that I didn't hear about? No. It is, for the most part, a phantom fear.

A recent survey by the ABA found that ... 93% of those asked considered regulatory burden their No. I concern. That sounds like a united industry. We need to act like one.

We need to tell Congress, the administration, and the public about what we could do if we spent less time shuffling compliance forms and more time working with our customers.

Stating the Interstate Case

I think we can win this one! During the campaign, President Clinton said, "A small business ought to be able to get a one-page form to comply with every requirement the federal government puts on it." I know lenders who would settle for a 100-page form.

I would like now to touch on some ... other issues we at Norwest believe are key.

Under present laws, a customer of Norwest Bank Iowa cannot make a deposit at an office of Norwest Bank Nebraska.

When interstate banking and branching are mentioned, opponents are quick to say that deposits wilt be vacuumed up, credit will dry up, and independent banks will be bought up.

But Norwest's experience belies these alarmist predictions.

We frequently compare our ratio of loans to lendable funds to that of our competitors in various markets across the 13-state region where we have banks. We are always comparable to or better than our competitors. This performance is not an act of altruism. It's our job.

In the four states where Norwest operated when it was founded in 1929 - Minnesota, Wisconsin, Iowa, and North Dakota - there are 1,763 banks. That is roughly 15% of all banks in the country - in a group of states with about 5% of the nation's population. This shows that community bankers in the upper Midwest are up to the challenge.

Of course, Norwest and other bank holding companies are acquiring some independent banks. But I would argue from experience that the primary reason this occurs is that owners of these small banks are frustrated with burdensome regulation. It's not that they can't compete.

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