Fed Could Provide Helping Hand to Small Bank ETFs

Regional and community bank-related exchange traded funds could outperform in the financial space as Federal Reserve Chairwoman Janet Yellen expresses calls for greater accountability on Wall Street but potential relief for smaller banks.

“With respect to small and medium-sized banks, we must build on the steps we have already taken to ensure that they do not face undue regulatory burdens,” Yellen said in testimony prepared for a House Financial Services Committee hearing Wednesday.

Yellen glossed over a number of potential tweaks to community bank rules that have been proposed or are under consideration, such as changing the capital rules, reports Ryan Tracy for the Wall Street Journal.

The Fed and other agencies “are actively considering proposals to simplify regulatory capital requirements for community banks,” Yellen said.

On the other hand, Yellen reiterated the Fed’s intention to enact greater capital requirements on the largest U.S. banks, which officials believe still pose a threat to the economy if they were to revisit another financial downturn event.

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