Community bank experience should be a prerequisite for the next Federal Reserve Board nominee, a group of 16 senators told President Barack Obama. The bipartisan group — led by Sens. Heidi Heitkamp, D-N.D., and Mark Kirk, R-Ill., — said in an April 10 letter that community banks play a crucial role in underserved communities. They also noted that the Dodd-Frank Act directed the Fed to write and revise regulations that impact banks of all sizes.
Fed Gov. Jeremy Stein recently announced he will step down in May, and the senators said Obama should take the concerns of community bankers into account as he seeks a replacement. They urged the president to select a nominee with community bank experience or community bank supervision experience.
Having a voice at the Fed has been extremely important for the community banking industry in recent years. Elizabeth Duke, a former community banker, was an important community bank advocate until she left the Fed board last summer.
Duke worked to ensure that community bankers were heard as the Fed and other regulators crafted final rules implementing Basel III’s guidelines in the United States. Prior to that, in late 2012, Duke called on regulators to institute a separate set of mortgage regulations for community institutions. She also directed Fed researchers to study community banks’ role in the mortgage market.
The senators said nominating an individual with community banking or supervisory experience would ensure that future Federal Reserve actions and regulations are tailored to reflect a “nuanced understanding of the regulatory and economic environment faced by community banks.”
“The Federal Reserve has a duty to protect and promote growth within the American economy, and a diverse range of perspectives on the board of governors will help the Federal Reserve incorporate all viewpoints and ensure that community banks remain an important component of our financial services delivery system,” the lawmakers said. “All communities — from the largest metropolitan areas, to exurban cities, to rural villages — deserve safe, unburdened and fair access to a sound financial system.”
View the letter
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