Elizabeth forms body for supervision of banks
Elizabeth A Duke, Member of the Board of Governors of the Federal Reserve System addressing at the Community Bankers Symposium said it is a real pleasure for me to have the opportunity to speak to community bankers at this annual Community Bankers Symposium sponsored jointly by the Federal Reserve Bank of Chicago, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC).
I know that many of you are concerned about the banking agencies' recent proposals to revise the capital rules, the so-called Basel III proposals.1 So I will start my remarks with an update on those proposals.
Then I will move to a more detailed discussion of some data that I have found interesting as I have been thinking about the effect of regulations as they relate to residential mortgage lending.
Before I begin, I want to assure you that all of my colleagues on the Board of Governors, including the Chairman, are concerned about the effect of regulation on com- munity bank lending. In fact, we have established a subcommittee of the Board, which I chair, to focus on the supervision and regulation of community and small regional banks.
In addition, we have established a Community Depository Institution Advisory Council (CDIAC) made up of community banks, thrifts, and credit unions to advise the Board about issues facing smaller institutions.2 But I want to also be clear that any opinions I express today are my own and may not reflect those of other members of the Board.
Let me turn now to the capital proposals. As we enter the final deliberative phase of this rulemaking, I want to emphasize that the feedback we have received during the comment period has been extremely valuable and that we will work very hard to address your concerns in the final rules.
Also, I would like to address the specific concern expressed by some bankers that these rules will be effective January 1, 2013, forcing them to potentially make changes with little preparation.
We have received a large number of comments and want to closely consider each issue. Therefore, the agencies this morning announced that we do not expect that any of the proposed rules would become effective on January 1, 2013.3 Further, the agencies offered the assurance that institutions will have time for transition once the rules are effective.
Before the proposals were issued, our staff of economists and analysts conducted research to estimate the potential impact of the proposed rules. Their analysis indicated that the vast majority of community banks would already meet the new standards.
Nevertheless, it was critically important to hear directly from community banks to better understand how individual institutions and their business plans might be affected by the proposals. Admittedly, the capital proposals were quite lengthy and in many cases applied only to the largest banking organizations. So, for the first time in a regulatory proposal that I'm aware of, short summaries were added to the capital proposals to explain more clearly which aspects were likely to affect community banks.