Bank Data

The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 authorizes interstate mergers between banks beginning June 1, 1997. When this law was passed, there was a concern that information regarding the distribution of bank deposits and loans by state would be lost. As a result, GAO was mandated to determine whether implementation of the act would result in a material loss of information that is important for federal bank regulation and oversight. GAO found that it the extent interstate branching becomes prevalent, data from financial filings known as call reports, as currently collected and reported to regulators, will become less useful for approximating bank loan and deposit activity within a state. As bank holding companies consolidate by merging multistate banking operations and as banks expand across state lines, call report information reported at the bank level will increasingly encompass the loans and deposits from more than one state. However, accurately measuring loan and deposit activity by state was subject to limitations even before Riegle-Neal. 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.

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.