Bank Data:

Material Loss of Oversight Information From Interstate Banking Is Unlikely

GGD-97-49: Published: Mar 26, 1997. Publicly Released: Mar 26, 1997.

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Pursuant to a legislative requirement, GAO reviewed how the interstate branching provisions of the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 are likely to affect the usefulness of the deposit and loan data collected and reported to federal regulators by the banking industry under statutory and regulatory requirements, focusing on whether modifications to such data requirements would help to ensure that the implementation of the act's interstate branching provisions does not result in material loss of information important to regulatory and congressional oversight of banks.

GAO noted that: (1) to the extent that interstate branching becomes prevalent, call report data, as currently collected and reported, will become less useful for approximating bank loan and deposit activity within a state; (2) as bank holding companies (BHC) consolidate by merging multistate banking operations and as banks expand across state lines by opening or acquiring branches, call report information reported at the bank level will increasingly encompass the loans and deposits from more than one state; (3) however, accurately measuring loan and deposit activity by state was subject to limitations even before Riegle-Neal; (4) BHCs had already begun establishing interstate operations and creating regional booking centers for some of their activities and national markets have developed for certain bank products; (5) compared with the information that existed before it was enacted, the implementation of Riegle-Neal is unlikely to result in a material loss of information necessary to perform regulatory and congressional oversight for three reasons; (6) first, as previously mentioned, the usefulness of call report data to approximate bank loan or deposit activities within a state was already somewhat limited and has become increasingly so, but only in part due to Riegle-Neal; (7) second, sources of information collected at the branch level or by geographic location should not be affected by interstate branching; (8) for example, summary of deposits data should still be available to measure deposit activities that are booked in a particular state, although these data will not provide information on the geographic source of those deposits; (9) also, home mortgage loan data should be available as an indicator of mortgage loan activity in a geographic area; (10) finally, the most useful and detailed information about bank activities is attained through examinations; (11) regulators with primary supervisory responsibility still have this tool available, although those who rely solely on off-site information will not; and (12) for these reasons, at this time, there does not appear to be sufficient need to modify regulatory or statutory reporting requirements.

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