ACDIC members discuss economic conditions and major political issues


Current banking conditions remain “mostly stable, but there are longer-term concerns given current economic conditions,” members of the Federal Reserve’s Community Depository Institutions Advisory Council said at a meeting. which took place earlier this year, according to recently released minutes. Loan demand was mixed, with demand for business and consumer loans increasing, but mortgage and construction lending slowing, committee members said. Commercial real estate loans remained stable.

Members also discussed a number of banking policy issues, including central bank digital currencies, which one member called “the most important issue for the future of community banking. . . because it has the potential to fundamentally change [the]financial system.” Members generally agreed that the potential benefits of a CBDC “are often overstated and would be difficult to realize.”

The council also expressed concern about the lack of clear guidance from regulators regarding the assessment of climate-related risks. Among other things, they expressed concern that the guidelines for large institutions that have been proposed by the OCC and FDIC would have the effect of “directing funding from industries to smaller banks, which would then drive regulators to apply the guidelines to small institutions”.

Regarding the issue of overdraft, board members pointed out that overdraft services are valued by bank customers and that imposing additional restrictions on overdraft fees could ultimately reduce banking services.


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