The Fed board: Shortchanging America
Community banks that put their customers first increasingly seem to be an endangered financial species as big banks grow ever bigger. And heightening such concerns is the lack of community banking representation on the Federal Reserve Board of Governors under incoming Fed chief Janet Yellen.
There are nearly 7,000 community banks in the United States. While they hold just 14 percent of financial industry assets, they nevertheless provide almost half the small loans that go to farms and small businesses that employ 4 million Americans. And community banks also serve rural areas and smaller towns that big banks don't, according to a 2012 Federal Deposit Insurance Corp. report.
The two Fed governors with retail banking backgrounds have left the board. President Obama's nominees to replace them lack such experience. That's particularly worrisome as smaller banks scramble to cope with new regulations that the Fed is issuing under 2010's dubious Dodd-Frank Act.
And it leaves the Fed board without members who know the day-to-day concerns of typical Americans firsthand. The input of community bankers is as necessary for the Fed board as are community banks for a healthy economy.
Community bankers must rejoin the ranks of the Fed's governors as other vacancies occur. To function most effectively for America and the economy as a whole, the Fed board must know what's on the minds of Wall Street bankers but those on Main Street, too.
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