Community Banks are important to communities by assisting small businesses, providing banking alternatives, and driving local economic growth.
FDIC Chairman Martin J. Gruenberg, stated in 2016, “First – you have heard me say this before, but I think it bears repeating – community banks play a critically important role in the financial system and economy of the United States.”
Federal Reserve Board Chairman Ben Bernanke, testifying before the Senate Budget Committee, said “Small banks have been playing just an incredibly important role, particularly as large banks have cut back on their lending to small businesses, and in other contexts they have in many cases stepped up and proven their worth to the U. S. economy.”[1]
Federal Deposit Insurance Corporation’s former Chairwoman Sheila Bair stated,[2] “Things are getting better, the situation is improving.” Bair also said that community banks will survive in the new financial environment. “We’re very determined on that score,” she said. “I do strongly feel it’s in the public’s interest to have diversity and choices of their banking relationships and a lot of people want to do business with community banks. It’s our obligation to make sure that sector is vibrant and competitive.”
Office of the Comptroller of the Currency, Senior Deputy Comptroller Jennifer Kelly testified before the United States Senate: “Let me say first that community banks play a crucial role in providing consumers and small businesses in communities across the nation with essential financial services as well as the credit that is critical to economic growth and job creation. While we have been through an extremely difficult economic cycle that has been challenging for institutions of all sizes, I am pleased to report that conditions are beginning to stabilize for community banks, and we are seeing these institutions return to profitability. As a result, the vast majority of these banks will continue to play a vital role in supporting their communities and the nation’s financial system.”[3]
The December 2012 study completed by the FDIC states, “The value of community banks has always been associated with the unique combination of services they provided to their customers, as well as the manner in which they do business. Community banks tend to be relationship lenders, characterized by local ownership, local control and local decision making. By carrying out the traditional banking functions of lending and deposit gathering on a local scale, community banks foster economic growth and help ensure that the financial resources of the local community are put to work on its behalf. Community banks have always been inextricably linked to entrepreneurship.”[4]
[1] American Banker, January 10, 2011, reporting on Federal Reserve Board Chairman Ben Bernanke testifying before the Senate Budget Committee
[2] Chattanooga Times Free Press, FDIC Boss Says Banks Healthier, February 25, 2011.
[3] Senior Deputy Comptroller for Midsize and Community Bank Supervision, Jennifer Kelly testimony before the Financial Institutions Subcommittee, Committee on Banking, Housing, and Urban Affairs United States Senate April 6, 2011.
[4] FDIC Community Bank Study, December 2012, Federal Deposit Insurance Corporation.
