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Community banks are unlikely to be impacted by a new financial oversight law, Federal Reserve Chairman Ben Bernanke said on Wednesday.
Bernanke’s message, delivered in a pre-recorded video segment at the Independent Community Bankers of America conference in Nashville, Tennessee, was referring to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The new regulation mandates enhanced oversight and regulation of banks and financial institutions.
Bernanke said the regulations were only expected to apply to larger institutions. “These new standards are not meant to apply to, and clearly would not be appropriate for, community banks,” he said. “We will work to maintain a clear distinction between community banks and larger institutions in the application of new regulations.”
The Fed would also try to make it clearer if and how a regulatory measure applies to the smaller institutions rather than have the banks waste resources in understanding them, Bernanke added. “Although this change seems relatively simple, we hope it will help banks avoid allocating precious resources to poring over supervisory guidance that does not apply to them,” he said.
He added that communication between the central bank and community banks needed to improve. “I think we would all agree that two-way communication between regulators and community banks is critical. Banks need to understand supervisors’ policies and expectations, but supervisors must also listen to and understand banks’ concerns,” he said.
Bernanke also maintained the Fed’s cautious view of the economy. “Despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending,” he said.
On Tuesday, Federal Reserve officials had reiterated that the central bank would keep short-term interest rates at “exceptionally low levels” through late 2014, Fox Business reported.
To contact the reporter on this story: Aabha Rathee at firstname.lastname@example.org
To contact the editor responsible for this story: Damien Hoffman at email@example.com
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