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CSBS Releases White Paper on Challenges Community Banks Face in Raising Capital

 

Dec 14 - Community banks have long played a valuable role in the United States economy. They do business far different from larger institutions, they add diversity to the U. S. banking system, and they proved critical in ensuring access to credit during the financial crisis. But today, these institutions face a growing challenge in accessing a resource that is vital for them to thrive – capital.

The Conference of State Bank Supervisors has released a white paper that defines the issue of capital formation at community banks and raises the awareness of its importance to the financial system. In the paper, CSBS identifies industry, legislative and regulatory challenges these institutions must overcome to increase access to capital. The paper also identifies areas for possible solutions to these challenges. 

"I have seen firsthand the challenges smaller banks face in trying to attract capital," said Mark Kaufman, Commissioner of the Maryland Office of Financial Regulation. "Much has been said about the vital role community banks play in job development and local economic growth, but more must be done to ensure these banks can access the capital they need to thrive."

Regulatory and legislative challenges discussed in the white paper include the Federal Reserve Board’s Policy Statement on Equity investments in Banks and Holding Companies; consolidated capital requirements for holding companies and source of strength standards, both provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and Basel III capital standards. Also discussed is the importance of banks to make self-assessments of the reality in which they operate today. This includes the aptitude of management to build confidence in investors and an honest assessment of the economic prospects for the areas they serve.

Click here for the white paper.


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