Bernanke: Fed Nurtures Links with Community Banks
The Federal Reserve places great importance on its relationship with community banks and seeks to maintain open and consistent communication with smaller institutions, Federal Reserve Chairman Ben Bernanke told attendees at the Independent Community Bankers of America National Convention in Nashville, Tenn., on March 14.
In a prerecorded video, Bernanke enumerated the various channels through which the Fed pursues dialogue with community bankers. He also discussed the challenges smaller banks face and summarized the improving state of community banks nationwide.
"I think we would all agree that two-way communication between regulators and community banks is critical," Bernanke said. "Banks need to understand supervisors' policies and expectations, but supervisors must also listen to and understand banks' concerns."
Fed stays in touch with small banks through special channels
These councils bring valuable intelligence to the Fed. For example, based on input from the CDIAC, the Board of Governors is working to clarify which banks will be affected by new regulatory proposals and final rules. In addition to the advisory council, the Board of Governors in 2010 set up a subcommittee to review policy proposals for their potential effect on the condition of, and the regulatory costs to, community and regional institutions.
Community banks meeting challenges
Community banks appear to be meeting these challenges, the chairman remarked. Profits rose in 2011 from the year before, while asset quality and capital ratios also improved.
March 27, 2012