Testifying last month at a Senate Banking Committee hearing on “Implementing Wall Street Reform: Enhancing Bank Supervision and Reducing Systemic Risk,” the Comptroller of the Currency and the acting FDIC chairman went to some lengths in their written presentations to describe how they are responding to the concerns of community banks about onerous rules and regulations and over-zealous examiners.
“As a former state banking commissioner, I have a keen appreciation for the critical role that community banks play in providing consumers and small businesses in communities across the nation with essential financial services as well as the credit that is critical to economic growth and job creation,” said OCC head Thomas Curry. “I am committed to making sure our supervision of these institutions is fair and balanced, and that wherever possible we minimize their regulatory and compliance burdens.”
Curry continued, “As we implement regulations for the Dodd-Frank Act and other key reform efforts, one of my early directives to the OCC staff has been to assess the potential impact on smaller institutions, seek ways to minimize potential burden, and explain and organize our rulemakings in ways that help community bankers understand the scope and application of the rules to their institutions.”
The FDIC’s Martin Gruenberg relayed to the committee the concerns expressed by many community banks that “the Dodd-Frank reforms will adversely affect their ability to compete with larger banks and non-bank competitors.” Noting that the FDIC takes these concerns seriously, he added, “As the lead federal regulator for the majority of community banks across the United States and the insurer of all, it is incumbent on us to better understand the role of community banks in our economy and the particular challenges they face in the financial marketplace.”
In his written testimony, Gruenberg talked about initiatives he and senior FDIC officials are undertaking related to the future of community banking. One of these is a comprehensive review of the evolution of community banking over the past 25 years by the agency’s Division of Insurance and Research. “Our hope is that this study will identify key challenges facing community banks, as well as stories of successful community bank business models and will provide an analysis that may be useful for community banks going forward,” he said.
Gruenberg also told the senators, “I have asked the directors of the FDIC’s Division of Depositor and Consumer Protection to review the examination process for both risk management and compliance supervision, as well as to review how we promulgate and release rulemakings and guidance, to see if we can improve our processes and communications in ways that benefit community banks while maintaining our supervisory standards.”
Life will not get easier for CEOs and compliance officers anytime soon, of course, but it looks like bankers’ many D.C. fly-ins, letters and phone calls, legislative gatherings and personal visits to senators and representatives are having an effect. Anecdotally, a few bankers have reported that recent exams have been more constructive than confrontational.
While the atmosphere may be clearing, bankers should not get comfortable and cancel the storm watch.
Bill Poquette is editor-in-chief of BankNews.
Copyright (c) July 2012 by BankNews Media