Fed Governor Calls for Regulators to ‘Develop and Refine’ Supervision of Community Banks

Earlier this week, Wall Street Journal writer Lalita Clozel reported that, “Federal Reserve governor Michelle Bowman called Monday for regulators to ‘develop and refine’ how they supervise community banks ‘to fit the smaller size and less-complex risk profiles of these banks.’

‘I witnessed firsthand how community banks were significantly affected by the global financial crisis, a crisis they did not cause,’ said Ms. Bowman, a former small-town banker and regulator from Kansas, in her first speech since joining the Fed’s powerful board of governors in November.

“Congress passed a law in 2015 requiring that the seven-seat board have at least one member with ‘demonstrated primary experience working in or supervising community banks having less than $10 billion in total assets.'”

The Journal article stated that, “It is ‘crucial,’ she said, to ‘balance effective regulation and supervision to ensure the safety and soundness of community banks while also ensuring that undue burden does not constrain the capacity of these institutions to support the communities they serve.’

“Speaking Monday at an American Bankers Association conference in San Diego, Ms. Bowman enumerated continuing efforts backed by the Fed and other regulators to ease capital rules, examination and other compliance requirements for smaller banks.

“Ms. Bowman highlighted some risks facing community banks, including concentrations in agricultural credit and credit-risk-prone activities.”

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