Testifying before the House Financial Services Committee today, Federal Reserve Vice Chairman for Supervision Randal Quarles noted that “the banking sector remains in strong condition… with lending growth, fewer nonperforming loans and strong overall profitability.” He added that 99 percent of all regional and community banking are currently considered well capitalized.
Quarles — who will appear before the Senate Banking Committee tomorrow — also highlighted recent actions the Fed has taken to increase transparency and efficiency of its supervisory operations, including improving the supervisory ratings system for large banks, issuing a joint interagency statement clarifying the role of regulatory guidance, and expanding exam cycles and reducing reporting requirements for community banks. Noting that “our work to improve regulatory efficiency is not done,” Quarles said he expects to see progress in the coming months on a community bank leverage ratio proposal in conjunction with the FDIC and the OCC.