WASHINGTON, D.C.—Shayna Olesiuk, Director of Banking Policy, issued the following statement on a Comment Letter sent to the House Financial Services Committee (Committee) responding to its “Make Community Banking Great Again” principles.

“Community banks are vital to Main Street Americans, providing a safe place for families and small businesses to safeguard and grow wealth and then reinvest local dollars to help communities thrive. Community banks have also proven themselves resilient in the face of merger pressures, economic downturns, evolving technology, and the COVID-19 pandemic. The Committee has presented a set of principles that emphasize the importance of community banks, but there are numerous provisions that would make it more difficult for them to support our economy and Main Street.

“We support aspects of the principles that would help community banks, including supporting innovation, regularly reviewing bank regulation, assessing the appropriateness of the examination cycle, revising merger criteria to include an assessment of the merger’s effect on local communities and consumers, holding regulators accountable for applying the supervisory appeals process fairly to all banks, and adjusting the threshold for Consumer Financial Protection Bureau supervision for inflation. But we do not support aspects of the principles that would harm community banks, such as allowing risky crypto activities into the banking industry under the pretense of combatting debanking, turning a blind eye to climate-related financial risk, further deregulation in the name of tailoring, minimizing or removing bank examiner judgment in the risk assessment of banks, and rolling back the brokered deposits rule.

“The Committee should also add to the Principles to fill current gaps, like protecting the FDIC, holding the largest banks accountable for their risk with higher capital requirements and strong living wills, increasing regulation and oversight of nonbank financial institutions, increasing deposit insurance coverage to include small business transaction accounts, and adopting a more holistic definition criteria for community banks to target and measure the impact of policy changes.”    

The Comment Letter is available here.

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