Secretary of the Treasury Scott Bessent addressed the Fed Community Bank Conference amid an ongoing government shutdown. In his prepared remarks, Bessent expressed concern over the continued closure, attributing it to the Senate's refusal to support a funding bill passed by the House. He stated, "Across the Trump Administration, we are eager to get the government reopened so agencies can continue the work of the American people."
Bessent emphasized the significant role community banks play in supporting local economies, noting their importance in small towns across America. He highlighted regulatory challenges faced by these institutions, saying, "Regulation has gradually suffocated the banks that are closest to the men and women who work the jobs, pay the bills, and take out the loans that fuel growth in small-town America—banks that not only know their customers by name but also their financial hopes and dreams."
He outlined steps taken by the Trump Administration to reduce regulatory burdens on community banks. According to Bessent, early actions included rolling back several regulations from previous administrations. He said, "Just days after President Trump was sworn into office, the Administration began rolling back the regulatory excesses of the Biden years. The regulators ended the politicized use of reputation risk in supervision. They proposed to rescind an embarrassingly complicated 60,000-word Community Reinvestment Act rule. And they retracted a merger policy statement that was both bad policy and bad law."
The Treasury Secretary discussed recent reforms implemented by federal agencies such as FDIC and OCC aimed at tailoring regulations for smaller banks and streamlining procedures. Bessent acknowledged ongoing efforts to further ease compliance requirements and modernize illicit finance regulation.
He also mentioned new proposals designed to clarify key supervisory terms and practices: "Two days ago, the FDIC and the OCC proposed a rule that would codify the recently adopted prohibition on using reputation risk as a basis for supervisory criticism." He added that another proposed rule would define “unsafe or unsound practice or condition,” which he described as a significant step forward.
Addressing anti-money laundering (AML) and countering financing of terrorism (CFT) reforms, Bessent noted recent actions by FinCEN: "Today, FinCEN released FAQs to address pain points on some of these issues, including triggers for structuring SARs, continuing activity reviews, and the absence of any requirement to document a decision not to file a SAR. These are commonsense yet consequential reforms that will ease regulatory burdens without undermining law enforcement efforts."
Looking ahead, Bessent identified priorities such as reforms to bank rating systems, examiner oversight processes, appeals mechanisms for supervisory criticisms, coordination among regulators to avoid duplicative exams, and review of core platform provider contracts affecting innovation.
On deposit insurance reform and secondary mortgage markets, he said Treasury supports congressional efforts for modernizing frameworks while maintaining equal access for small lenders.
In closing his remarks, Bessent encouraged community bankers: "The community bank comeback will help pave the way for America’s Golden Age. Recognize the outsize role you play in this effort. And embrace it. Because if you lead the way, Main Street will follow."
