Community Bank Representation Act
Summary
The Community Bank Representation Act aims to enhance the representation of community banks within the Federal Reserve System. It mandates that a member of the Board of Governors with community bank experience develop policy recommendations and oversee the supervision of banking organizations with less than $17 billion in total assets. The act also requires this member to appear before congressional committees semi-annually to discuss these efforts.
Expected Effects
The act will likely lead to increased focus on the specific needs and challenges faced by smaller community banks in federal regulatory policy. It also introduces a mechanism for adjusting the asset threshold for community banks based on nominal GDP growth. This could provide more tailored regulatory oversight and potentially reduce the burden on smaller institutions.
Potential Benefits
- Enhanced Representation: Gives community banks a stronger voice within the Federal Reserve.
- Tailored Regulation: Allows for policies that are more appropriate for smaller institutions.
- Increased Oversight: Provides Congress with more direct insight into the regulation of community banks.
- Dynamic Threshold: Adjusts the asset threshold based on economic growth, preventing regulatory creep.
- Consultation: Requires consultation with the community bank Governor on relevant matters.
Most Benefited Areas:
Potential Disadvantages
- Potential for Regulatory Capture: The designated board member might unduly favor community banks, potentially at the expense of broader financial stability.
- Increased Complexity: Adding specific responsibilities could complicate the Board's decision-making process.
- Limited Scope: The focus on banks under $17 billion might neglect issues affecting larger regional banks.
- Reporting Burden: Semi-annual hearings could place an additional burden on the designated board member.
- Unintended Consequences: Adjusting the asset threshold based on GDP may have unforeseen impacts on bank regulation.
Constitutional Alignment
The act appears to align with the Constitution, particularly Article I, Section 8, which grants Congress the power to regulate commerce and establish a uniform currency. The creation of specialized roles within the Federal Reserve System to oversee specific types of banks falls under this broad authority. The Act does not appear to infringe on any specific constitutional right or freedom.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).