Federal Reserve Governor Jerome Powell said the central bank should consider steps to reduce the regulatory burden on community banks.
The Fed will “consider whether modifications to rules, or the ways in which we implement them, could achieve our safety and soundness aims with a lesser burden on this class of depository institutions,” Powell said in a speech at the Federal Reserve Bank of St. Louis. He didn’t comment on the outlook for monetary policy or the economy in his prepared remarks.
The central bank is working to implement the 2010 Dodd-Frank Act, aimed at repeating the financial crisis that led to the collapse of several of the country’s largest financial institutions. Smaller U.S. banks have said their behavior did not lead to the financial crisis and these regulatory changes put them at a disadvantage because they lack the resources to meet the tougher rules.
“The Dodd-Frank Act has spawned a variety of new regulatory initiatives that add to the already-substantial regulatory burden faced by community banks,” Powell said.
Powell spoke at the St. Louis Fed’s conference on “Community Banking in the 21st Century,” a research and policy conference for bankers, regulators and academics.
Fed Chairman Ben S. Bernanke, speaking at the same conference yesterday, said community banks face big challenges including slow economic growth and compliance with stiffer regulation.