The Federal Reserve will hold a conference on Oct. 9 to discuss and identify issues facing community banks, Fed Vice Chair for Supervision Michelle Bowman said on Saturday.
During a speech at a Kansas Bankers Association summit, Bowman announced that the event will be held in Washington, D.C., and will bring together bankers, industry experts, academics and other stakeholders to discuss the Fed’s work with community banks. She also said the Fed is already examining elements of the bank regulatory framework unique to community banks, including the community bank leverage ratio, liquidity sources and regulatory expectations, and rethinking capital options and operations for mutual banks.
“In my view, it is time to consider modifications to the CBLR framework that make it a more attractive framework and will encourage more banks to adopt it,” Bowman said about the first point. “We should also consider whether it was appropriately designed and calibrated to fulfill the congressional intent to achieve regulatory relief. For example, reducing the CBLR requirement from 9% to 8% could not only allow more community banks to adopt the framework but also increase balance sheet capacity for all CBLR firms, facilitating additional support for local economies through lending.”
As for mutual banks, Bowman said the institutions have long faced limited capital options and restrictions on managing capital distributions. “In the past, when regulators prioritized regulatory reform by asset size alone, they neglected critical issues that affect smaller institutions,” she said. “Our responsibilities as prudential regulators should be broadly focused on banks of all sizes, ensuring relief across the broad range of asset sizes.”
Bowman also asked bankers to participate in a joint banking agency request for information on payments and check fraud, with Sept. 18 the deadline for comment. “We must have a comprehensive strategy to develop and implement an effective, coordinated approach, and your input is vital to getting that approach right,” she said.
