The future of community banking is bright as long as regulators focus on appropriate regulations and guidance and recognize that investment in innovation and growth is a necessity, not a roadblock, according to Federal Reserve Governor Michelle Bowman.
Highlights: Speaking in Kansas, Bowman said:
Community banks can operate safely and soundly, and in compliance with laws, without being subject to the same extensive guidance and regulatory requirements as larger, more complex banks.
While many factors influence the health of community banks, policymakers should consider whether there are actions regulators can take to support the future of community banks.
A significant problem with the current approach is the failure to index and update how a community bank is defined, with economic growth and inflation creating an environment in which thresholds are inappropriately low.
There needs to be a better, more timely, transparent, and viable path for all bank regulatory applications, in particular mergers and acquisitions. In the absence of a better bank applications process, institutions will explore other options, including credit union acquisitions.
ICBA View: Addressing broken regulations and advancing a tiered regulatory environment are key elements of ICBA’s “Repair, Reform, and Thrive” plan for the 119th Congress and Trump administration.
