U.S. Representative Ed Royce (R-Calif.) questioned Chair of the Federal Reserve Board of Governors Janet Yellen about increased community bank consolidation at the House Financial Services Committee hearing entitled “Semi-Annual Testimony on the Federal Reserve’s Supervision and Regulation of the Financial System.”
“I had a question… about the unprecedented consolidation that we have seen in community financial institutions where there are fewer and fewer of them. Smaller institutions have fewer assets over which to spread their ever-growing compliance costs, so they often seek those economies [of scale] through mergers. That’s what leads to this conundrum where we have fewer banks today than we did during the Great Depression. Are you worried about the consequences of consolidation for communities and for our economy, and eventually for overleverage when you end up with just a few big institutions that hold so much weight?” asked Rep. Royce.
“I do think it’s essential that we have a vibrant set of community banks serving America’s communities. They play a very special role in our financial system and it’s important that they remain healthy. Reducing regulatory burden is important and is something that we will seek to foster using every available tool that we have. Community …read more
Source:: U.S. Rep. Ed Royce