Fed Chairman Bernanke Discusses Community Banking Challenges, Recovery
Community banks were hit hard by the financial crisis and economic downturn, but many of them have begun recovering, Federal Reserve Chairman Ben Bernanke said in a March 23 speech.
Speaking at the Independent Community Bankers of America national convention, the chairman pointed out the vital role smaller financial institutions are playing in the broader economic recovery. "Despite some of the worst economic conditions since the Great Depression and their own strained balance sheets, community banks have already been doing their part to meet the credit needs of their customers," including small businesses, he said.
Community banks provide grassroots link
Additionally, several recent initiatives will deepen the Fed's interactions with community banks, including a special supervision committee chaired by Federal Reserve Governor Elizabeth Duke, a former community banker. In particular, the subcommittee will look at how new policy proposals might affect smaller institutions.
The Fed will also get important feedback from the newly established Community Depository Institutions Advisory Council (CDIAC). Each of the 12 Reserve Banks has formed a council made up of local bankers who will provide insight on the economy, lending conditions, and other issues.
Regulatory changes present challenges, benefits
Despite still-difficult conditions, including the weak economy, uncertainties in key markets, and regulatory changes, the chairman expressed optimism that community banks will "successfully navigate these new challenges."
April 22, 2011