WASHINGTON Feb 5 U.S. community banks have not
suffered a loss in deposits to larger lenders, as some had
feared when unlimited deposit insurance expired at the end of
last year, a senior Federal Reserve official said on Tuesday.
"We are watching deposit movement carefully, but so far have
seen little evidence of deposits moving out of the banking
system or as some had feared, moving from smaller banks to
larger banks perceived as 'too big to fail,'" Fed Governor
Elizabeth Duke said in remarks prepared for delivery to a
conference of community bankers in Duluth, Georgia.
Unlimited U.S. deposit insurance that was introduced during
the 2008-2009 financial crisis was allowed to expire at the end
of 2012. The insurance is now capped at $250,000 per depositor.
Duke in her prepared remarks did not mention U.S. monetary
Herself a former community banker, Duke sympathized with
those concerned by new financial regulation facing the industry
and who painted a picture "so bleak that they see only personal
retirement or the sale of the bank as viable strategies."
But she said that community banks had been spared from many
of the new regulations, and she urged those who object to some
of the planned rules to push back by suggesting other ways of
controlling risk in their institutions. The same went for the
proposed Basel bank capital rules agreed to by world leaders.
"We will do everything possible to address the concerns that
have been expressed by community bankers and still achieve the
goal of having strong levels of high-quality capital - built up
over a reasonable and realistic transitional period - in banks
of all sizes, including community banks," she said.