Mr. President, I thank my colleague, Senator Hutchison, for her great leadership on this issue. We have worked together from the beginning on this amendment, and you can see there is support for this amendment from the Lone Star State to the North Star State, spanning this country—as you look at the many States across this country that truly believe it is important to have the regional Federal Reserve involved in decisions, not have anything and everything concentrated in Washington and New York City, which we believe got us into lots of this trouble in the first place.

The amendment we have offered is important because what it does is seek to preserve a system that ensures that the institution charged with our Nation’s monetary policy has a connection to Main Street, not just Wall Street—Main Street in Benson, MN; Main Street in Austin, TX; Main Street in Denver, CO. That is what we are talking about.
As I have said before, Main Street banks pretty much stayed away from the high flying, way-too-risky deals of the past decade, and when the pavement on Wall Street began to buckle and collapse, these banks—these small community banks—did not panic and run to Washington with tin cups and outstretched hands.
Like the rest of Main Street, they suffered because of bad bets made on Wall Street. But they kept doing their work. They kept serving their customers. So now, with us debating a Wall Street reform that will affect how these small banks, these community banks do business, I think they have a right to speak up. That is what this amendment is about.

I would like to give a lot of credit to Chairman Dodd, who is here as usual in the late evening hours, as well as Ranking Member Shelby, along with the rest of their Banking Committee who worked so incredibly hard. Chairman Dodd has been working with us on this amendment and has been working with us on many issues affecting the community banks. I thank him for that.

 I think we took another important step yesterday when we passed the Tester-Hutchison amendment that will make sure community banks pay only their fair share when it comes to Federal bank insurance.
But the issue my colleague, Senator Hutchison, so eloquently discussed is whether the Federal Reserve will continue to oversee our State member community banks. That issue still remains.

Like I am sure all of you have, I have heard from my community banks. I have heard from the Fed. I have thought about this a lot. I just want to give you an example of what those community banks—the bankers out there in the heartland, who basically are standing out there with their feet firmly on the ground, with their briefcases in their hands. They were not there as these credit default swaps swallowed and swirled around their heads. They were there just doing their job.

Here is what Noah Wilcox, the president of Grand Rapids State Bank in Grand Rapids, MN—Grand Rapids, MN, home of the Judy Garland Museum. If you ever want to go there, you can actually put your head in a cut-out hole of the Tin Man. Yes, you can. The Tin Man—right—needed a heart. The lion needed courage. And the scare crow needed a brain. You could go there to Grand Rapids.

Well, this is what the president of the Grand Rapids State Bank said:

"All Senators should be reminded that the Federal Reserve System was created to serve all of America, not just Wall Street.”

From the Lone Star State to the North Star State.

When Congress established the Federal Reserve in 1913, Congress purposely created a system of regional banks, overseen by a board in Washington, to ensure that the power of this institution would not be concentrated far from these banks and the communities they serve. That is why I believe Mr. Wilcox’s—the guy from Grand Rapids, the banker—statement rings especially true. He was not just advocating for his bank or other banks in Minnesota or across the country. He said the Federal Reserve was created for "all of America."

The Federal Reserve Bank of Minneapolis just does not supervise banks, it also partners with the communities it serves by providing resources and sharing expertise. I will give you one example. We have Art Rolnick, known nationally for the work he has done on early childhood development. He works with the Federal Reserve. He is one of their policy experts. He is retiring this summer. He has literally devoted the last few years of his career looking at early childhood development—the investment. He has put out numbers. He has put out studies straight from the Federal Reserve because he had that information on the ground to show the kind of return of investment you get when you invest in kids early on. I do not think we would see that coming out of the Federal Reserve in Washington. This came out of the regional banks.

This interaction with regional banks can clearly be seen in the interdisciplinary research it conducts in Minnesota with the University of Minnesota and in its partnerships with financial institutions and community-based organizations to provide investment in low- and moderate-income communities.

Together the regional banks provide a presence across this country that gives the Fed grassroots connections—not just in board rooms in New York, not just in the hallways of Congress in Washington, but right there in Grand Rapids, MN, on Main Street—insights into local economies. What is happening with the timber industry? What is happening with the medical device industry? They know that on the front line. What is happening to the high-tech industry? What is happening with the telecommunications industry in Denver? That is what the regional banks do for us.

They also provide legitimacy when they have to make tough decisions—when the Fed has to make those tough decisions—to have those regional banks out there with legitimacy in the banking community and the business community to say: This is not just about Wall Street; this is also about Main Street.

Their geographic diversity also allows the regional banks to develop unique expertise. For instance, the Federal Reserve Bank in Minneapolis has a wide breadth of knowledge in the agricultural economies of Minnesota and the other States in its district. You are not going to get that in the middle of New York City. You are not going to get that in the middle of Washington, DC. Through the Federal Reserve of Minneapolis, the community banks they supervise have a better understanding of the markets that ultimately aid them in their loan making decisions.

Through their working relationships with community banks, the regional Federal Reserve banks also collect and analyze important information about the movements and trends in local economies. Because community banks interact with so many parts of the economy—from the ordinary folks who bank with them, to the small businesses they provide loans, to real estate developers, and even local governments—their connections to the communities they serve provide a unique perspective for the Fed to tap.

This relationship is a two-way street, as it also provides a voice for our community banks that would be lost if the Federal Reserve were to only supervise the largest banks. A system like this would certainly limit, and potentially distort, the picture the Federal Reserve gets of what is happening in our Nation’s banking system.

I repeat, this crisis did not happen because of this little bank in Grand Rapids, MN. It happened because eyes were not watching what was going on on Wall Street. Eyes were not watching what was going on in these big banks. The rest of these guys—these small banks—they were the ones who were the victims of this crisis.

As the president of the Federal Reserve Bank in Minneapolis pointed out in a speech this past March, it would be shortsighted to conclude that the Federal Reserve “can safely be stripped of its role as a supervisor of small banks.” As he noted, disruptions in the financial system can come from all sectors and the connection the regional Federal Reserve banks provide to local economies can be vital in ensuring the stability of the financial system.
Opponents will argue that the Federal Reserve does not need to supervise banks to gain insight into them, that they can get this information by other means and through other sources. But, currently, much of the Federal Reserve’s interaction with community banks comes from the supervision done by its examiners. Many of these examiners have lived and worked in the districts they serve for many years, and the information they provide is critical to the Fed’s understanding of local economies.

This system—a system that serves all Americans—is threatened if we do not act. Currently, the Federal Reserve Bank of Minneapolis—and I am sure you see this in Texas, in Missouri, in Colorado, and the Federal Reserve’s banks all across this country—currently, the Federal Reserve Bank of Minneapolis oversees over 600 banks in the Ninth District. Without this amendment, it would oversee one—one—bank.

This is what my friend, the Senator from Texas, is talking about. You would go from 600 banks—in an area that did not cause this financial crisis, that was simply a victim of this financial crisis—you would take 600 banks from them, send them out somewhere in a consolidated way to Washington and New York, and they would oversee one. All they would have is a bank holding company with over $50 billion in assets. This means connections to over 600 communities will be lost, not just in Minnesota, but in Montana, North Dakota, South Dakota, Wisconsin, and Michigan. That is the region.

The Federal Reserve System was designed to prevent it from being focused just on Wall Street, at the expense of Main Street. That is why the Hutchison-Klobuchar amendment is so important, to put this bill in a place where we not only get the great accountability of the bill, with the great work that is being done in every single sector, so we do not make these mistakes again that were made that brought us to the brink of a financial crisis that allowed all of these banks to be on the verge of collapse—and some of them, in fact, collapsed on Wall Street—that is an important piece—but it is equally important to make sure our Main Street community banks get a fair shake and that the Federal Reserve in the regional areas of this country—from the Lone Star State to the North Star State—be allowed to continue to get the information they need to do their job.

I urge other Senators to join Senator Hutchison and me in supporting this amendment, to make sure the voices of our community banks, the voices of our small towns across the country and the local economies they serve, continue to be heard.