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FDIC releases progress report on Community Bank Initiative

Martin Gruenberg

Martin Gruenberg

The FDIC released a progress report on its Community Banking Initiative last week, detailing the steps taken to respond to banker concerns voiced at roundtable discussions earlier this year.

Launched in February, the CBI examined the evolution of community banks over the past 25 years, paying specific attention to the challenges and opportunities presented to community financial institutions, American Banker reports.

Despite concerns from the financial industry regarding the future of community banks, FDIC officials said that the future for small financial institutions is a positive one.

“The bottom-line finding is that even with all of the consolidation that’s taken place and the market challenges that exist for community banks, the core community bank model of reliance on relationship banking funded by core deposits remains quite viable,” FDIC Chairman Martin Gruenberg said, according to American Banker.

The report said that the FDIC will pilot an automated tool beginning next year that will be used to streamline materials used for consumer-protection exams and detailed efforts being undertaken to assist community bankers to comply with new regulations.

Gruenberg said that the FDIC will take additional steps to enhance the supervisory process.

“We’ve undertaken some useful initiatives both related to examinations and rule-making, but I think there is more for us to do,” Gruenberg said, American Banker reports. “This is in some sense a valuable work product and in some sense a valuable progress report on the work we’ve done over the past year. But I think there is more for us to continue to do.”

Earlier in the year, the FDIC hosted six regional roundtable meetings in which bankers voiced their concerns regarding the regulatory regime and challenges facing the banking sector. Some concerns related to the mounting degree of regulation that could affect lending, uncertainty regarding the regulatory future and inconsistency during bank exams.

Changes made by the FDIC so far have focused largely on improving communication between the agency and the institutions it is responsible for overseeing, according to American Banker.

The FDIC has also revised the process that allows bankers to meet with regional supervisors and examination staff between exams and has taken steps to ensure that data-collection pertaining to the Home Mortgage Disclosure Act is more consistent with the processes used by other regulators.

“We’re going to try to make some changes where changes make sense and where it’s practical to do so,” John Weier, a special advisor to Gruenberg, said, American Banker reports. “We will continue to look at the exam and the rule-making process to make sure that we continue to make it as effective as possible.”

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