Federal Reserve announces supervision changes for community banks

Jerome Powell, Federal Reserve Governor, said recently that the agency plans to launch a new supervision program for community banks next year. With the new program, a larger focus will be on an individual bank’s risk profile. Powell noted that this includes a bank’s “consumer compliance culture and how effectively it identifies and manages consumer compliance risk.”

Speaking at a joint conference by the Federal Reserve and the Conference of State Bank Supervisors, Powell also discussed the importance of U.S. community banks. He reiterated the Fed’s commitment to not excessively weigh down smaller-sized financial institutions as a result of the 2010 regulatory reform law. Powell said the agency “will continue to be alert to the possible unintended consequences of regulatory policies.”

Community banks have placed regulators under pressure to ensure that they won’t face overly complex rules. To help, some regulators have provided extra information on how a rule would affect their institution in the form of “cheat sheets.” Powell also said that the Fed will continue to “assess the effects of new rules” and evaluate if adjustments to the rules or how they are implemented could reduce the burden on community banks.

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For more information on the advice community bankers shared about their recent Federal Reserve examination, download the 2013 Bank & Credit Union Examination Survey.