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Federal Reserve vice chair for supervision outlines priorities for community banks
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Summary
Speaking remotely at the 2025 Community Banking Research Conference, the Federal Reserve's vice chair for supervision said the Fed will pursue regulatory tailoring for community banks, review asset-size thresholds and streamline M&A review while refocusing supervisory work on core risks and fraud prevention.
The vice chair for supervision of the Federal Reserve Board, speaking remotely at the 2025 Community Banking Research Conference, outlined a set of priorities intended to ease disproportionate regulatory burdens on the nation’s community banks and to modernize supervision.
The remarks, delivered at a conference that has run since 2013 and is co-sponsored by the Conference of State Bank Supervisors (CSBS) and the Federal Deposit Insurance Corporation (FDIC), said the Fed will review existing supervisory thresholds, reconsider aspects of its rating and leverage frameworks, and pursue measures to promote new bank formation.
“Community banks are the cornerstone of local economies, providing credit to local customers and businesses with few alternatives for accessing financial services,” the vice chair said. The speaker described the community bank model as relationship-based and emphasized its local knowledge and role in meeting credit needs.
The vice chair noted that the position of vice chair for supervision — created under the Dodd-Frank Act in 2010 — is charged with developing policy recommendations for the Board on supervision and regulation of depository institution holding companies and other firms supervised by the Board. “This position…requires the vice chair to develop policy recommendations for the board regarding supervision and regulation of depository institution holding companies and other financial firms supervised by the board,” the speaker said.
Among the concrete priorities cited were a review and potential indexing of asset-size thresholds used across the supervisory framework, efforts to better measure the trade-offs and hidden costs of compliance for small banks, streamlining the mergers-and-acquisitions review and approval process, and identifying ways to promote new bank formation. The transcript also records the speaker saying the Fed is "refocusing supervisory efforts on core material financial risks" and explicitly mentioned reviewing the CAMELS rating framework (the transcript used the phrase "camel's rating framework").
The speaker said the Federal Reserve has already launched initiatives to advance these goals but added that more work lies ahead. The remarks also singled out anti-fraud work as a prioritized area: "We are also prioritizing work to assist in the fight against fraud," the vice chair said.
The speech framed these changes as part of an effort to make supervision more tailored to community banks’ scale and business model. The vice chair cited research presented at this conference and findings from the CSBS annual survey of community banks as informing that view and as tools to better measure compliance costs.
The remarks concluded with an announcement that the Board will host a community bank conference in Washington, D.C., bringing together bankers, industry experts and other stakeholders, and that the event will be livestreamed on the Board’s website.
The remarks were delivered as prepared; no formal votes or motions were taken during the session.
