Thank you, Julie [Stackhouse], and welcome everyone.
Let me express my deep thanks to you, Julie, and your terrific staff here at the St. Louis Federal Reserve Bank. You have been gracious once again to invite us into this wonderful facility, and organize so much of this agenda. There simply would not be a CSBS-Federal Reserve Community Banking Research Conference without all these marvelous people here in St. Louis.
I am proud to join an impressive roster of speakers for this conference. Federal Reserve Governors and Bank Presidents. Leading academics and researchers. Community bankers and college students. Everyone from those who set monetary policy for the United States…to the next generation of banking professionals. That is how broad our reach is. That is how important our conference is.
And it is not just the conference itself. It is the work of hundreds of people…who care about community banking…who care about how well communities are served by their banks…who care whether consumers will have the means to buy that next house or open that business. That is what this conference is about. It is about building a financial system that can be there for them.
When I look at the financial system today, I see a system that needs to get better. I continue to be concerned about:
- Whether banking is becoming too disconnected from the communities they serve
- Whether families and small businesses – no matter where they are – have equal access to banking services that are safe and fair
- Whether fintech companies and other technologies can make the banking system better – or turn into something that takes advantage of consumers
- And whether the federal government is a partner that supports a diversified banking system -- or unintentionally creates more consolidation
These are the concerns on my mind. They are the concerns of other state regulators. And I would hazard a guess that they the concerns of some in this room.
As a state regulator, I supervise a wide range of financial institutions. But the core of state regulation has always been community banks…the local institutions that finance Main Street businesses, provide banking services in our neighborhoods, sponsor Little League baseball teams, and go into the schools to teach young adults about how to manage finances.
We are right in wanting to preserve this form of financial services. In our diversified system, there is room for many different business models – from large money-center banks that compete across the globe…to virtual financial providers one tap away on your smartphone…to good old fashioned banking based in and for the community.
As a regulator, I believe that consumers benefit from a broad diversity of sources for credit and banking services. But, today… I am here to stand up for the community. We are here to learn how the community lending model can serve more families and more businesses…to learn what are the obstacles – and the opportunities – before them. And it all starts with data.
This is the fifth year that CSBS and the Federal Reserve have co-sponsored this research conference. Over the years, we have unearthed valuable data on product composition, compliance costs, impact of new regulations, adoption of new technologies, and analysis of new business models. And this data has been quantitative as well as qualitative. Our survey research of community banks paints a picture, while the color is filled in through townhall discussions between bankers and regulators.
This data is how we know that:
- The core business model of community lending holds up better than others during times of economic distress
- Small business and commercial lending are sources of growth, not contraction
- Federal mortgage regulations have created a drag on lending
- And annual compliance costs for community banks approach $5.4 billion…that’s a pretty big number to me
Now, this data not only has value to individual community banks planning their future. The data also has value in Washington with federal regulators and policymakers. More and more, they want to know how rules and legislation being considered might affect community banks. We are able to answer some of their questions – not all of them, but some. Our research has contributed to an emerging belief in Washington that there should be different regulatory regimes for banks that pose systemic risk and those that do not. And that’s good news for community banks.
The 2017 version of this research conference looks to add to our collective knowledge. In the various panels, we will learn about:
- The relationship between geographic proximity of bank supervision and bank success
- How regulations based on asset size affect bank mergers and acquisitions
- How community banks respond to entries and exits within a competitive market
- How government guarantees have spurred lending to small businesses
- And lots more
As chairman of CSBS, I am proud to represent all state regulators today. And I am proud that the Federal Reserve is our partner for this conference. The Federal Reserve has been generous with its time, people, resources and speakers. Together, we are committed to looking at our financial system, and finding ways to make it better. For community banks. But more importantly, for the consumers, families and small businesses they serve.
I hope you enjoy the conference.