FDIC Chair on Policy Actions to Better Address Need of Community Banks
At the Community Development Bankers Association Peer Forum and Membership Meeting, the FDIC Chair Jelena McWilliams outlined the decisions taken as a result of the feedback by bankers that will help focus FDIC efforts to better address their needs. She has been meeting with local bankers, state supervisors, and consumer groups to obtain feedback on many important topics, including the needs of their local communities, the regulatory approach of FDIC, and ideas to promote economic inclusion.
As a result of her meetings, the FDIC Chair has directed staff to increase efforts to:
- Actively seek ways to reduce regulatory burden on community banks
- Encourage community banking, including the establishment of de novo banks in communities of all sizes
- Promote and preserve the Minority Depository Institutions of the nation
- Modernize the Community Reinvestment Act (CRA) framework and provide clarity to institutions on their CRA obligations
- Ensure that the regulatory framework encourages banks to offer products and services to low- and moderate-income households
She added that technology is another area that can help FDIC and financial institutions meet consumers where they are. Although fintech firms have developed new approaches to reach consumers, improve the customer experience, lower transaction costs, and increase credit availability, she wants to see more banks leveraging technology to do the same. Last fall, it was announced that FDIC is establishing a new internal office to promote innovation in the industry. FDIC has already begun partnering with banks to understand how they are innovating and promoting technological development at community banks, which may have limited funding for research and development. FDIC is also looking at what policy changes are needed to encourage innovation, while maintaining safe and secure financial services and institutions. This is especially important because technology offers a tremendous opportunity to expand access to the banking system, said Ms. McWilliams.
As of March 31, United States has 4,930 insured community banks and FDIC is the primary federal supervisor for many of these institutions. She highlighted that the latest FDIC survey shows that more than 8 million households do not have any relationship with the banking system while another 24.2 million households are underbanked. Millions of Americans are missing out on the important benefits banks provide, including wealth-building opportunities and the protection provided by deposit insurance. Innovation and technology have the potential to provide important inroads to reach these consumers. According to the FDIC Chair, "Supporting this segment of the banking system is paramount. Community banks in the U.S. are intertwined in a symbiotic relationship with their communities: if those communities do not do well, neither will their community banks."
Related Links
Keywords: Americas, US, Banking, Community Banks, Fintech, Proportionality, Regulatory Approach, FDIC
Previous Article
ESRB Advisory Scientific Committee Report on Regulatory ComplexityRelated Articles
EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package
EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.
EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway
The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.
PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks
In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.
FSB Sets Out Work Priorities for 2021
In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.
EU Publishes Corrigendum to Revised Capital Requirements Regulation
EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).
ESAs Issue Statement on Application of Sustainability Disclosures Rule
ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).
EC Consults on Crisis Management and Deposit Insurance Frameworks
EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.
HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA Proposes Standards for Supervisory Cooperation Under IFD
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE Addresses Banks in Scope of First Resolvability Assessment
BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.
