Regulators emphasize community bank exemptions during Senate hearing

Federal banking regulators emphasized community bank exemptions from various regulations while testifying before the Senate Banking Committee.

Testimony: During an oversight hearing:

  • FDIC Chairman Martin Gruenberg and Federal Reserve Vice Chair for Supervision Michael Barr noted that community banks are exempt from proposed capital rules targeting banks over $100 billion in assets.

  • Gruenberg said interagency climate risk principles are intended for institutions over $100 billion in assets and that his agency recognizes that community banks may experience climate risks differently than larger institutions.

  • Acting Comptroller of the Currency Michael Hsu said the OCC will work to prevent requirements for large banks from trickling down to community banks and imposing undue burdens.

ICBA View: Amid a surge in rulemaking activity, ICBA has:

  • Commended regulators for targeting proposed capital and debt requirements to institutions over $100 billion in assets while calling on policymakers to continue to distinguish large banks from community banks.

  • Objected to the agencies’ climate principles, which include vague language describing all financial institutions and could ultimately affect community banks.

  • Expressed concerns with the Community Reinvestment Act final rule’s disproportionate implementation costs for community banks.

  • Noted the Fed’s recent interchange proposal would harm smaller card issuers, including those intended to be exempt from the proposal.

Next: The regulators will be back on Capitol Hill today for a House Financial Services Committee hearing.