FDIC Imposes Broad Disclosure Rules on Banks

Commercial banks would have to publicly distribute details of their financial condition under rules adopted Thursday by the Federal Deposit Insurance Corp.

Industry groups have opposed the requirement, contending that the reports could confuse customers, dampen their confidence in banks and even trigger runs on deposits.

However, the FDIC, which insures deposits up to $100,000, contends that the public could benefit from a greater knowledge of banks’ condition, particularly small business firms and professionals who depend on banks for uninterrupted banking services and credit.

Starting next March 31, banks will have to make available an annual report for the previous year containing information including earnings, revenue, provisions for problems loans, deposits and cost of funds.

Banks won’t have to disclose disciplinary actions taken by regulators except on a case-by-case basis as determined by the FDIC.

The information is already provided quarterly to bank examiners. Now, banks will have to make copies of the report available annually on request and post notices about it in their lobbies.

FDIC Chairman L. William Seidman said the new rule does a good job of responding to the needs of the industry while still providing the information to people who need it.

However, William Bosies of the American Banking Assn., which opposed the regulation, said the information in the new reports is already available to consumers who write to the FDIC or Office of the Comptroller of the Currency.

The distribution requirement will impose unnecessary costs on small banks with fewer than 500 shareholders who now do not have to make the disclosures that are required of large bank holding companies by the Securities and Exchange Commission, he said.

The reports also are highly technical and might confuse the average reader, Bosies said. “The basic problem is one of understanding.”