Letter to FDIC on Communication Transparency

Dear Mr. Feldman,

The American Bankers Association (ABA) appreciates the opportunity to comment on the Federal Deposit Insurance Corporation (FDIC) Request for Information on FDICCommunication and Transparency (RFI), released on October 1, 2018. The RFI seeks comment on how to make the FDIC’s communications with insured depository institutions (IDIs) moreeffective, streamlined, and clear. Further, the FDIC has requested specific feedback on many ofits current forms of communication, including Financial Institution Letters (FILs), Statements ofPolicy, Quarterly Banking Profiles, and the fdic.gov website.

ABA fully supports Chairman McWilliams’s “Trust through Transparency” initiative—thecommitment to build public trust and confidence by fostering a deeper culture of openness andaccountability, the publication of performance metrics, and by providing increased access todata. An important component of this initiative is to promote access to, and understanding of,FDIC information and resources by the institutions it supervises and insures. Therefore, wesupport the RFI’s objective to “maximize efficiency and minimize burden associated withobtaining information on FDIC laws, regulations, policies, and other materials relevant to IDIs."

To achieve this goal, we urge the FDIC to distinguish, clearly, critical regulatory and supervisorycommunications from other “informational” communications and to minimize the use ofmultiple, duplicative channels to disseminate information which increases the potential forconfusion. ABA recommends that the FDIC define clearly the information that will becommunicated through particular channels and that the FDIC limit the use of FILs so that theyserve to announce only important supervisory and regulatory information. Such informationwould include new regulations, statements of policy, supervisory guidance documents, advisories, Frequently Asked Questions (FAQs), and examination manual updates and additions.In addition, we recommend that the FDIC update communications platforms.

I. Assign specific types of information to particular types of documents andcommunication channels and avoid duplication.

To make FDIC communications more effective, a first step is to assign specific types ofinformation to particular documents and communication channels. For example, there arecurrently a number of different documents that may contain significant supervisory andregulatory information: FILs, statements of policy, FAQs, Questions and Answers, examinationmanuals, and supervisory guidance documents, statements, and advisories. It is unclear whatprompts the FDIC to use one document type versus another, or the key differences between thesedocuments. We believe that banks would benefit from a clear statement of the FDIC’sclassifications for these documents and the identification of the channel that will be used tocommunicate each.

The RFI notes, “[t]he FDIC uses many forms of communication to inform IDIs aboutregulations, policies and guidance, industry data and educational materials, and other news andupdates. Some forms of communication may be used to disseminate more than one type ofinformation, and some materials may be distributed through multiple channels.” This makes itharder to locate key information, and increases the chance that bankers might overlook or missimportant information because they did not look in the correct place. It also requires bankers toreview and compare the various document types to confirm that they have not missedinformation.

While it is understandable to seek to distribute information as broadly as possible, overcommunicating increases the risk that FDIC messages will be overlooked. For example, in mid-November 2018 the FDIC released updated curriculum in the MoneySmart for Adults program.The FDIC sent at least two emails regarding the release, both [email protected]. One message was an announcement of the release, thesecond contained a FIL which announced the release. There is little value in duplicatinginformation in this way, particularly information not related to supervisory or regulatoryconcerns.

II. Use Financial Institution Letters to convey only supervisory and regulatoryinformation.

To respond to this RFI, ABA conducted an informal survey to which nearly 100 bankers frominstitutions of varying descriptions responded. According to our survey, bankers refer to FILsfrequently and view them as a source of important information, particularly supervisory information. Nearly all of the bankers surveyed report referring to FILs at least a few times amonth. Thus, FILs should be reserved as a method of communicating significant supervisory andregulatory information, including new regulations, statements of policy, supervisory guidancedocuments, advisories, FAQs, and examination manual updates and additions. FILs should notbe used as a vehicle to announce webinars, meetings, or other communications.

Many FILs simply announce the issuance of another document—for example a new regulation,policy statement or exam manual update. ABA recommends that after a defined period of time(perhaps 6 months) these FILs are retired but made available for archival reference, to avoidconfusion and duplication. Then bankers can be confident that they are fully apprised of theFDIC’s expectations on any particular issue if they have consulted the relevant sourcedocuments. Such consolidation will conserve bank personnel resources and promote compliancewith regulations and supervisory expectations. ABA supports the FDIC’s recent retirement of374 out-of-date FILs, and going forward we encourage the agency to review and retire FILs on aregular schedule.

As the authoritative source for supervisory and regulatory information, FILs should besearchable and indexed by topic, applicable statute and/or regulation, publication date, and byinstitution size to which the FIL applies. Currently, FILs can be found either chronologically orby word search. The full text of all FILs should be word-searchable and searchable according tospecific criteria. For example, the fdic.gov website should offer the ability to search for everyFIL that mentions flood or RESPA, every FIL from a particular time period, every FIL withrecommended routing to the Chief Financial Officer, every FIL that applies to an institutionunder $1 billion in assets, and every FIL with all or some of those characteristics.

Additionally, careful attention should be paid to the routing recommendations on FILs. Routingrecommendations are the FDIC’s suggestion for which bank personnel should review a FIL.Used correctly, these recommendations can help bankers, but the FDIC has overused thesedesignations. For example, of the ten FILs published in November 2018, 9 have suggestedrouting to the Chief Executive Officer. This includes FILs on topics not broadly applicable to allbank CEOs, such as location-specific natural disasters and an FDIC survey. In the previousexample regarding the MoneySmart for Adults curriculum, the FIL announcement includedsuggested routing to a bank’s Chief Executive Officer, Community Reinvestment Act Officer,and Chief Retail Officer. While the MoneySmart curriculum is certainly a valuable resource tobankers, updates to MoneySmart rarely merit the attention of a bank CEO, even for a smallinstitution.

III. Update communication platforms and data reporting.

In addition to better organization of FILs, the FDIC should allocate resources to updating itsFDICconnect platform, which is used by bankers to upload documents responsive to examination request letters and other materials. ABA survey respondents noted that the platform is outdated,when compared to the messaging platforms that banks provide to their customers for securecommunications. ABA members also report that FDICconnect cannot handle large file sizes, andsuffers from very sluggish response and loading speeds. Updates to this important platformwould improve communication and lessen the burden of exam preparation.

Our survey also noted relatively low use of FDIC telephone and email communication platforms.Fifteen percent of the bankers surveyed had not heard of the 877-ASK-FDIC hotline, and ofthose who had, over half reported never using this resource. In qualitative questioning, bankersreport mixed experiences with the hotline as well as the email inboxes ([email protected]). While a few have found these resources useful in the past, many bankerswith recent experience have found them unhelpful. They report that replies from both resourcesappear to be highly scripted rather than responsive to the individualized question presented. TheFDIC should ensure that these communication platforms respond to questions in a meaningfulmanner, or forward questions to staff with the authority and knowledge to provide usefulanswers.

The FDIC should also update its data reporting, including the Statistics on DepositoryInstitutions (SDI)8 which are made available on a quarterly basis. These Quarterly BankingProfiles have improved significantly in the past decade and are a useful complement to theFDIC’s community banking reports and data. Additionally, the FDIC’s current practice of live-streaming the report’s release makes it more accessible to banks who use this information on aregular basis.

The FDIC could increase the value of the SDI by making its data easier to use and access.Specifically, SDI reports should mirror the existing categories of bank call report data fromwhich the SDI is compiled. It is unclear why the SDI consists of certain items rather than the fulldata set, or why certain categories are omitted, such as interest income earned on different loantypes. Further, other data categories are not referenced consistently with the call reports. Forexample, line items in the SDI are not displayed in the order in which they appear on a bank’scall report. This makes it difficult to locate quickly specific line items on the SDI. As the SDI isclearly intended for advanced users, its organization and formatting should be consistent withcall reports. Additionally, allowing SDI users to access multiple quarters of data at a time wouldimprove functionality.

IV. Looking forward.

Thank you for the opportunity to comment on this important initiative. ABA appreciates theFDIC’s commitment to communicate more efficiently and effectively with IDIs. ABA alsorecommends that the FDIC regularly collect feedback from visitors to its fdic.gov website. TheFDIC will likely receive actionable recommendations from a website usability survey which asks site visitors what they were looking for, whether they were able to find it, and suggestions forimprovement.

If you have any questions, please contact me at 202-663-5338 or [email protected].

Sincerely,

Diana C. Banks
Senior Counsel, Center for Regulatory Compliance