A proposal to require all banks to file quarterly call reports electronically instead of on paper is coursing forward, but not without static from smaller banks.

Under the proposal, released by the three banking agencies in November, all commercial and savings banks would have to send call reports via modem or on diskette to Electronic Data Systems Corp.

Banks would either file their reports electronically with EDS or contract with a third party to transfer their paper reports into electronic form and file with EDS. The requirement would be phased in beginning June 30.

About 54% of banks were voluntarily filing electronically as of mid- 1996, up from about 28% five years ago. About three-quarters of those are banks with more than $100 million of assets. Thrifts are already required to file electronically.

The banking agencies argue that electronic filing will save both the government and the industry time and money. Error-detection features would reduce the number of post-filing corrections needed and should improve the quality of the data, according to the government.

But bankers are concerned about added costs, security of data, responsibility for any mistakes made by intermediaries, and possible expansion of the reports.

In comment letters due last week, several national and state banking associations suggested refinements. But some small banks, which would bear the brunt of change because many still file reports on paper, were more critical.

"This proposed regulation appears to be done strictly for the convenience of the regulators with no benefit to the bank or its customers and with no justification for the additional costs," wrote William G. Wimmer Jr., president of Cuba City State Bank, Cuba City, Wis.

"Give us a break," wrote Bill J. McGinty, president of Glencoe State Bank in Glencoe, Okla. "This is a bank under $10 million of assets. We don't need more expense to make the FDIC jobs easier."

"Who authorized this?" asked Randall E. Streifel, executive vice president of Liberty State Bank in Powers Lake, N.D. "Was it Congress or some retiring government employee wanting to start a call report software business?"

These cynical comments appear unlikely to reverse the tide toward electronic filing.

"I suppose in the long run, it probably is inevitable," said Cary H. Hiner, an associate director of supervision with the Federal Deposit Insurance Corp., "but there is nothing that prevents us from working with the small banks."

"To be honest, I think it will be implemented," said Elizabeth A. Aaron, regulatory policy representative for the Independent Bankers Association of America. "The majority of people, trade groups do support it ... In general, we see this as a good thing."

Most of its members approve of electronic filing, but the IBAA, whose membership includes many smaller banks, withheld formal support of the proposal because of a vocal minority.

"These guys that are against it are really adamantly opposed," Ms. Aaron said. The IBAA urged the banking agencies to find ways to reduce costs, such as providing free software, she said.

Small banks that want to stick with paper reports may do so by using a software firm to convert the records, explained Robert F. Storch, chairman of the Federal Financial Institutions Examination Council's reports task force. Some software firms may perform the service free of charge to gain new customers, he said.

Small bankers aren't optimistic about their chances. "I imagine we'll lose," said Glencoe's Mr. McGinty.

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