Washington (AP) - Federal Reserve Chairman Ben Bernanke told a group of small-bank executives on Wednesday that the financial overhaul will benefit their institutions because it will level the playing field with the industry's giants.
Bernanke said it would be important for the banks to adapt to the changing regulatory environment, in remarks prepared for the annual convention in San Diego of small- and medium-sized banks. Bernanke acknowledged their concerns about the new law. But he said most of the requirements are aimed the country's biggest banks and not them.
Congress passed the regulatory law last year in an effort to prevent a repeat of the 2008 financial crisis. Small-bank executives have complained that it will cost them a lot of money to meet the new rules, even though they were not responsible for causing the financial crisis.
Bernanke said that it was fortunate that Congress had decided to preserve the Fed's regulatory connection to small banks. In one version of the measure, the Fed would have lost the power to regulate small banks. But the law keeps the Fed's powers over small banks and broadened that power to include thrift holding companies. The thrifts themselves will be regulated by the Office of the Comptroller of the Currency. Congress abolished the Office of Thrift Supervision, which was viewed as a weak regulator.
Bernanke said the central bank was happy that it will now have the power to oversee hundreds of thrift holding companies.
"We are delighted that, through our supervision, our gathering of economic intelligence and the activities of our community affairs departments, we will be able to remain fully engaged with grass-roots America," Bernanke said.