On February 16, 2021, Governor Michelle Bowman delivered her speech, My Perspective on Bank Regulation and Supervision, at the Conference for Community Bankers sponsored by the American Bankers Association. You can read the speech by clicking the link below.
https://www.federalreserve.gov/newsevents/speech/bowman20210216a.htm
Released by the Board of Governors of the Federal Reserve System
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Although many banks have maintained branch operations in the wake of the COVID-19 pandemic, others have cut back significantly, if temporarily, or announced accelerated plans for permanent closures. This has heightened concerns about an ongoing consolidation of branches nationwide, which has reduced their number by 11% from a peak of 92,030 in 2009.1
Branch closures increase the distance people must travel from where they live, shop, work or otherwise prefer to engage in financial transactions. Those affected sometimes have to go without or must drive long distances to access them. Businesses may be forced to close during the workday to make deposits or withdraw cash in distant cities.2 The elderly, people with mobility issues and those without access to transportation may be particularly inconvenienced.
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There is more competition than ever in the provision of banking services, and financial technology (fintech) developments have turbocharged this trend. Traditional commercial banks, thrifts and credit unions are vying with fintech firms and other enterprises for customers or are pairing up with these new competitors to widen offerings, improve speed of service and take advantage of new technologies. Some of these nontraditional providers are specializing in one product or service, or are targeting a very narrow customer base. A number of them are obtaining bank charters, while others are seeking alternative charters.
Proud. Overwhelmed. Frustrated.
These sentiments and others expressed by bankers come from the 2020 National Survey of Community Banks, conducted annually by the Conference of State Bank Supervisors (CSBS) and state banking regulators for the past seven years. The survey is released each year during the annual Community Banking in the 21st Century research and policy conference; the event is sponsored by the Federal Reserve, the CSBS and the Federal Deposit Insurance Corporation. In this year’s survey, the effects of COVID-19 dominated and colored typical industry concerns related to regulatory burden, small business lending, industry consolidation, competition and technological innovation.
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The Community Reinvestment Act (CRA) is a federal law that requires federally insured banks to meet the credit needs of people in their communities while meeting safety and soundness standards. At the time of its 1977 passage, lawmakers were concerned about unequal access to credit and policies such as redlining, especially in low-and moderate-income communities. Bank regulators were given the task of writing, implementing and enforcing regulations to ensure banks were meeting the goals of the law.
CRA regulations were last updated in 1995, and much has changed in the banking industry in the last 25 years. Technological change—especially the move to online and mobile banking—means that a CRA focused solely on activity in brick-and-mortar branches will miss a large swath of banking activity as an increasing number of banks begin to operate online.