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."
Keywords: Americas, US, Banking, Community Banks, Fintech, Proportionality, Regulatory Approach, FDIC
Previous ArticleIASB Publishes Work Plan and Meeting Updates for July 2019
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.
Certain regulatory authorities in the US are extending period for completion of the review of certain residential mortgage provisions and for publication of notice disclosing the determination of this review until December 20, 2021.
The Prudential Regulation Authority (PRA) published the policy statement PS18/21, which introduces an amendment in the definition of "higher paid material risk taker" in the Remuneration Part of the PRA Rulebook.
The European Banking Authority (EBA) published its annual report on asset encumbrance in banking sector.
The European Banking Authority (EBA) published a methodological guide to mystery shopping.
The Australian Prudential Regulation Authority (APRA) released a letter to authorized deposit-taking institutions to provide an update on key policy settings for the capital framework reforms, which will come into effect from January 01, 2023.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report that assesses the business continuity planning activities of financial market infrastructures or FMIs.
The European Securities and Markets Authority (ESMA) has responded to the IFRS consultation on targeted amendments to the IFRS Foundation constitution to accommodate an International Sustainability Standards Board (ISSB) to set IFRS Sustainability Standards.