Officers at Metcalf Savings Bank plan to give the Federal Reserve Board a piece of their mind. They say the Fed asked for it.

Metcalf Savings Bank, a $120 million-asset community bank in Overland Park, Kan., was one of the many community banks that howled in protest when Regulation DD, also known as the Truth-in-Savings law, was passed. Community banks said the cost of complying with the regulation would be very high.

1,600 Expected to Respond

The Fred responded by asking banks of all sizes to fill out a two-part survey in which they would record the time and money spent complying with the new law. The questionnaire also asked banks to report any service or product changes that were being made because of the new law.

Federal officials expect that close to 1,600 banks plan to complete the survey. Metcalf officials agreed to participate because they wanted the voice of the community bank to be heard.

"We're talking about a regulation that is very lengthy and very difficult to understand," said Vicki L. Fisher, senior vice president. "We're a small bank without a legal department, which means implementing the regulation is very, very time-consuming for our officers."

Ms. Fisher estimated that Metcalf's officers spent close to 500 hours learning the regulation and preparing the compliance effort.

Costs Put at $30,386

"Every hour that our officers spent on this regulation was an hour that they could have been doing something else," she said.

According to Metcalf's completed questionnaire, a copy of which the bank made available to American Banker, Metcalf's start-up compliance costs for the Truth-in-Savings law will be $30,386.

That number encompasses review of the proposed regulation, legal expenses, training costs, data processing and system changes, redesign of disclosure statements, customer notifications, and other miscellaneous expenses. It does not include any ongoing expenses now that the rules have taken effect.

Metcalf's total operating budget for 1993 is $172,500.

Impact on Services

Metcalf also told the Fed that it plans to eliminate one of its two types of statement savings accounts offered, as well as reduce the interest paid and increase the fees imposed on the remaining products.

This service change bears out a fear shared by two of the Fed governors: Lawrence B. Lindsey and John P. LaWare. They approved the regulation to meet a congressional mandate, but they predicted that the new disclosure rules could backfire on consumers when banks cut their product offerings.

Metcalf officials said they did not expect to obtain any benefits from the new regulation.

"In the past, our employees could just sit and have a friendly conversation across the new-accounts desk if a customer was interested in our services," said Jon L. Stewart, chief financial officer. "Now we will have to fill out disclosures and hand them to the customer. It's a lot more paperwork and no one wins."

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