Gruenberg: Community banks lead during downturns

FDIC Acting Chairman Martin Gruenberg reiterated his recent remarks that community banks have an outsized role in lending during times of distress and providing equitable access to financial services.

Noted Research: In a speech at the 2022 Community Banking Research Conference following similar remarks released last week, Gruenberg cited research that has found:

  • The relationship-lending model is particularly adept at providing credit to small businesses during downturns while extending credit at similar levels during credit booms, which mitigates the negative effect of downturns on firm growth.

  • Primarily the presence of community banks—rather than bank presence more broadly—benefits lower- and moderate-income communities.

  • Minority depository institutions are associated with more credit to minority populations and minority homeownership.

  • Relationship-lending banks were associated with more Paycheck Protection Program loans.

ICBA Resources: The ICBA “Tell Your Story” Toolkit features custom marketing and communications resources on the benefits of community banking.