WASHINGTON (MNI) – The Federal Reserve is reaching out to an
important grass-roots constituency, the 5,000 smaller banks embedded in
their local communities, with a Web site and interview with Fed Chairman
Ben Bernanke — who said Thursday the smaller fry are successfully
competing with the big money-center giants.

“Community banks have a critical role in keeping their local
economies vibrant and growing by lending to creditworthy borrowers in
their regions,” Bernanke said in the debut presentation of the Web site,
communitybankingconnections.com.

Although larger banks “have used their scale to gain a pricing
advantage in volume-driven businesses such as consumer lending,”
Bernanke said, “”community banks have tended to specialize in other
areas, such as loans secured by commercial real estate.”

For the most part, he continued, “Community banks appear to be
meeting their challenges,” with profits “considerably higher in 2011
than in the previous year” along with improved capital ratios, lower
nonperforming assets and provisions for loan losses

“Community banks provide the Federal Reserve with unique insights
into local economic conditions, which helps us to have a better
understanding of the wider economy and to make better macroeconomic
decisions,” he said.

He reassured the smaller banks that Fed banking supervision takes
into account their complaints of burdensome regulations and said they
have been exempted from “the vast majority” of Dodd-Frank Act
provisions.

** MNI Washington Bureau: 202-371-2121 **

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