Quite often the NBA requests bankers to comment on pending regulatory proposals and occasionally bankers will ask the NBA for suggestions on the best way to get their points across to the regulators. This brief article highlights several previously published ideas on writing effective comment letters to bank regulators.[1]
Remember the formalities. In order for your comments to be considered without delay, be sure to include the reference or docket number of the proposal in a conspicuous place on the letter. Be sure the comment letter is mailed in time to reach the agency by the date specified in the notice. All properly submitted comments must be considered, regardless of content or organization. Since a regulatory agency is required by law to build a record to justify its rule-making authority, your comments become an integral part of that record. Direct your comments to areas or issues in the proposal where the agency can exercise discretion.
This requires some familiarity with the contents of the proposal. There is little value asking an agency not to adopt a rule that is required by statute. On the other hand, an effective comment letter will focus on those issues in which the agency’s discretion is either a help or hindrance to your bank. Generally, background information is contained in the proposal itself. When the NBA requests your participation, additional background materials or explanations are also given.
Use the 3 S’s - summarize, succinct, supplement.
In order to organize and outline the major points, it might be useful to summarize your comments clearly and conspicuously at the start of the comment. The letter should be organized to be read and processed easily. The specific details that follow need not be lengthy. It is helpful to mention your bank’s asset size and other relevant information to inform the agency of your unique perspective and unique problems with or need for the proposal. Specific criticisms, constructive suggestions, reasoned arguments and reliable data are more valuable than length. It certainly isn’t necessary to address each and every issue or item in the proposal. The arguments you make should be stated succinctly without repetition. Cite specific sections of the proposal and give examples of any problems that the proposal will cause your bank. Your letter may result in a greater impact when your comment is focused on a single issue of the greatest concern to you. Consider attaching only those documents which expand on the comments you make in your letter or that illustrate your arguments.
Give details on how the proposal will affect your bank.
Inform the agency of your bank’s specific problem(s) with the proposal. It is important to present your position on an issue, but it is equally important to make data available and offer arguments that expand on your position. A letter will be effective if it actually influences the regulator’s position rather than just stating a position. The agency should know what position you are taking, why you are taking that position and how the proposal affects you. Consider the following questions: What makes the proposal unnecessary, impractical, impossible, imprudent? What operational or procedural changes would your bank have to encounter if the proposal were made final? How would the proposal affect specific bank transactions, the bank itself, or the bank’s community, e.g., competitively, economically, politically, etc.? What changes in forms, documents, or other compliance concerns, difficulties or negative consequences would result from the proposal? How much would the proposed rule cost the bank or bank customers in terms of personnel, time and money? Will the proposal promote further confusion, ambiguity or potential litigation? Are serious, potential problems being created or overlooked?
Avoid using form letters.
If you’ve ever been a recipient of form letters, you would probably understand that after receiving a dozen identical letters, your interest may wane along with the sincerity of its contents. Mass mailings can limit or discount the effectiveness of the comments submitted. The orchestration is obvious and appears that the signers have given little or no independent thought to the matter at hand. Agencies seldom appear to react to nose counts, but will react to a variety of individual views. It would probably be better to submit one letter signed by multiple parties.
Remember Congress.
Although not a formality, you should share a copy of your comment letter with your elected representatives in the U.S. Congress - namely, U.S. Senators and Representatives. Since many regulations are the result of Congressional action, you should not let your comments stop with the regulators, but should share them with your elected representative so that they are aware of the effects of their action or inaction.
This article is based on the following publications appearing in the ABA Bank Compliance Magazine: “The Effective Comment Letter” by James D. McLaughlin and Paul Alan Smith (Summer 1992); “How to write an effective comment letter” by Sharon T. Bowman (Autumn 1988); and “From the Regulator’s Viewpoint: Writing an Effective Comment Letter” by Gerald P. Hurst (Spring 1981).