Federal Reserve Chairman Ben Bernanke told a group of executives from smaller banks Wednesday that the financial overhaul set out in the Dodd-Frank reform bill will level the playing field for them with the industry's giants.
Bernanke said it would be important for the smaller banks to adapt to the changing regulatory environment, in remarks to the annual convention in San Diego of small-and medium-sized banks, Associated Press reported. Bernanke acknowledged their concerns about the new law. But he said most of the requirements are aimed at the country's biggest banks and not them.
Congress passed the regulatory law last year in an effort to prevent a repeat of the 2008 financial crisis. Small-bank executives have complained that it will cost them a lot of money to meet the new rules, even though they were not responsible for causing the financial crisis, according to the wire service.
Bernanke said that the hundreds of community banks, with assets below $10 billion, would play a vital role in the nation's recovery because they are an important source of loans for small businesses.
"Although we are not yet where we would like to be, the good news is that many community banks have already been doing their part to meet the credit needs of their customers, notably including small business customers," Bernanke said in his speech to the Independent Community Bankers of America.
Bernanke said that it was fortunate that Congress had decided to preserve the Fed's regulatory connection to small banks. In one version of the measure, the Fed would have lost the power to regulate them. But the law maintains the Fed's powers and even broadened it to include thrift holding companies. AP notes the thrifts themselves will be regulated by the Office of the Comptroller of the Currency. Congress abolished the Office of Thrift Supervision, which was a weak regulator.
The Fed chairman said the broadened role for the central bank benefits everyone.
"We are delighted that, through our supervision, our gathering of economic intelligence and the activities of our community affairs departments, we will be able to remain fully engaged with grass-roots America," Bernanke said.
On Thursday, the Federal Reserve announced Bernanke will begin holding news conferences four times a year to explain the Federal Reserve's interest rate decisions and its views on the economy.
According to the Washington Post, the decision comes after the Fed held an unusual videoconference last fall in large part to discuss the need to improve its communications strategy. A Fed committee also had been studying whether to begin holding periodic news conferences.
The Post reports Bernanke's first news conference will take place after the Fed's April 27 meeting. That will augment the current communications strategy: a brief statement released after each of the Fed's eight policy-making meetings with no officials available to answer questions.
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