Because a state was the largest area within which a bank could expand, information collected at the bank level has been used by such parties to approximate bank loan and deposit activity within a state. To determine whether there would likely be a material loss of information important to regulatory and congressional oversight of banks, we reviewed call, Y-9, Summary of Deposit, Home Mortgage Disclosure Act (HMDA) loan application register, and required reserve reports collected by the regulators pursuant to laws and regulations. Call Report Data May Become Less Useful for Approximating Bank Activities by State

Regulators collect a variety of information about bank loan and deposit activities through reports filed by banks and BHCs. These reporting requirements were not affected by Riegle-Neal. Additionally, these data are only collected yearly. Data From Call and Y-9 Reports Have Historically Had Limited Usefulness in Determining State Banking Activity

Although regulators and other interested parties have used call report data to produce state, regional, and national summaries of the types and overall dollar amounts of loans and deposits held by banks, the data reported have always had limitations in their ability to provide information about the geographical location of banking activity. Interstate Branching Could Increase the Number of Banks Reporting Data From Activities in More Than One State

To the extent that interstate branching becomes prevalent, the usefulness of information reported to bank regulators, which is currently used to compile banking data on a state-by-state basis, would become even more problematic. If BHCs consolidate their operations by merging multistate banking operations or if banks expand across state lines by opening or acquiring branches, call report information would increasingly encompass the loans and deposits of more than one state. Implementation of Riegle-Neal Is Unlikely to Lead to Material Loss of Information

While the usefulness of data collected at the bank level to provide information for state-by-state measures of banking activity—including monitoring the industry’s geographic concentrations—may be affected by Riegle-Neal, it is unlikely to have a material effect on federal regulation or oversight for three reasons. Second, deposit data should continue to be provided at the branch level and, with the limitations noted, should provide some measure of state-by-state banking activity. Third, the most useful and detailed information about bank activities is attained through examinations. Regulators with primary supervisory responsibility still have this tool available, although those who rely solely on off-site information will not. However, they stated that to ensure there is no material loss of information necessary to oversee bank activities in an interstate branching environment, banks should be required to submit information on the origin of their loans and deposits. Therefore, the implementation of Riegle-Neal did not give rise to their concern, but does heighten it.
Why GAO Did This Study

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.

What GAO Found

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.