Treasury Secretary Describes Next Steps for Community Bank Reform
Treasury Secretary Scott Bessent outlined the Administration’s plan to revitalize community banks as part of a broader effort to reduce regulatory burdens.
In an address before the Federal Reserve’s Community Bank Conference, Mr. Bessent said post-crisis regulations have gradually weakened smaller lenders that understand their communities best. He noted that the number of community banks has fallen by nearly half since 2010, alongside a steep decline in new bank charters. Mr. Bessent emphasized that revitalizing these institutions is essential to restoring local growth and ensuring small towns share in national prosperity.
Mr. Bessent outlined a series of regulatory and legislative actions aimed at reducing unnecessary burdens on community banks. He said recent reforms ended the use of subjective risk metrics in supervision, simplified Community Reinvestment Act requirements, and withdrew rules tied to climate risk, brokered deposits, and digital assets. He said that the FDIC, OCC, Federal Reserve, and CFPB have each adopted measures to tailor oversight, streamline examinations, and revise outdated guidance. Mr. Bessent added that FinCEN has begun modernizing anti-money laundering supervision to focus on the effectiveness of compliance programs rather than procedural checklists.
Mr. Bessent said Treasury’s next phase will focus on strengthening supervisory accountability, modernizing capital standards, and expanding flexibility for smaller lenders. He explained that new measures will improve examiner oversight, create independent appeals for supervisory disputes, and reduce redundant examinations.
He added that Treasury aims to eliminate incentives that push lending to nonbanks, while ensuring community banks benefit from fairer capital rules. Mr. Bessent also voiced support for higher FDIC insurance limits, preserving small lenders’ access to mortgage markets, and reviewing technology provider contracts that restrict innovation.