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Federal Reserve Governor Michelle Bowman said regulatory disparities between community banks and nonbank providers—including credit unions—can have a distortive effect on competition.
Unlevel Playing Field: Speaking in Chicago on challenges to the community banking model, Bowman said that while a core concept in financial regulation is to impose the same rules on entities engaged in the same activities, community banks compete against credit unions and nonbank lenders that aren’t subject to the same regulation, such as the Community Reinvestment Act.
Regulatory Parity: “In short, where the financial regulatory framework can provide for parity of treatment, it should do so,” Bowman said. “The regulatory framework should not knowingly distort competition, or effectively impose a regulatory allocation of credit.”
Regulatory Burden: Bowman also said regulations must be tailored to the size and complexity of activities for each bank, noting regulators “cannot ignore the ‘cumulative’ or ‘compounding’ effect of increasing the complexity of the regulatory framework.”
Regulatory Roadblocks: Bowman also pressed for a regulatory system in which mergers and acquisitions and de novo bank formations are possible, not one in which regulatory approval requirements are used to impose additional (and extra-regulatory) requirements.
Previous News
The Independent Community Bankers of America (ICBA) today expressed support for an FDIC proposed rule that would enhance oversight of industrial loan companies, or ILCs. In conjunction with the letter, ICBA also released new polling data showing consumer skepticism with the ILC charter, a legal loophole that allows full-service banks to skirt oversight and violate U.S. policy separating banking and commerce.
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Oct 11, 2024
ICBA’s Check Fraud Task Force published a guide that explains the solutions available to community banks to detect instances of check fraud.
ImageOct 11, 2024
ICBA told the federal banking agencies that their proposals to update anti-money-laundering and countering-the-financing-of-terrorism programs would create additional burdens on banks without any demonstrable benefit to combatting money laundering or terror financing.
ImageOct 11, 2024
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