Speaking to a community bank conference in New York yesterday, Esther George — president and CEO of the Federal Reserve Bank of Kansas City — emphasized several areas where regulation is ill-suited to community banks and needs to be tailored.
For example, she pointed to the Basel III capital standards, which “layer on unnecessary reporting requirements and complexity for banks that already held high levels of capital.” ABA has long called on regulators to exempt highly capitalized banks from cumbersome Basel calculations.
George also fingered appraisal requirements as a challenge, noting that community banks “often located in more rural markets, struggle to find knowledgeable appraisers with sufficient comparable property sales to comply with the rules.” Making appraisal requirements more flexible to address the shortage of rural appraisers and long closing times is another area where ABA is focusing.
“Ultimately, communities suffer when access to credit is unnecessarily limited, and so does the larger economy,” George said. “Rules that aim to address the business models and incentives of the largest banks may unintentionally put the diversity of the banking system at risk, and the lack of new bank charters over the past decade suggests the barriers to entry may be high.”