WASHINGTON — Federal Reserve Board Gov. Sarah Bloom Raskin on Friday attempted to reassure community bankers that they would not be subject to the same hefty requirements their larger, more complex counterparts will face under Dodd-Frank.
"The community banking model is very different from that of the largest banks," Bloom Raskin said in a speech before the Maryland Bankers Association. "Community banks are local by their very nature. They have deep roots in their communities. Their value proposition is that they are able and willing to take the time and effort to know and work with their customers in a way that may not be possible for a larger, more distant institution."
Community banks, while not immune from taking on excessive risk, are less risky by nature, she said.
They are generally less complex and more easily understood, less interconnected and tend to be more traditional in their approach, she said.
"All of these characteristics have implications for how large and complex banks should be supervised, as compared with community banks," said Bloom Raskin.
Bloom Raskin said the Fed has been working to ensure that its supervisory program is tailored properly to the wide swath of institutions it's responsible for overseeing, while keeping a close eye on the effect such policies have on smaller banks.
"We consider not only whether specific policies are appropriate for community bankers, but also whether these policies could have the effect of reducing the availability of credit to sound borrowers,"said Bloom Raskin, who along with Fed Gov. Elizabeth Duke, helps to oversee the supervision of community banks.
The Fed, she said, is "actively involved" in trying to bring "greater clarity and specificity regarding the applicability of supervisory policies to community banks."
