WASHINGTON — Arkansas Bank Commissioner Candace Franks told the Senate Banking Committee on Tuesday that community banks should get more relief from federal regulations that have been enacted to prevent another financial meltdown.

WASHINGTON — Arkansas Bank Commissioner Candace Franks told the Senate Banking Committee on Tuesday that community banks should get more relief from federal regulations that have been enacted to prevent another financial meltdown.


Franks, who was speaking on behalf of the Conference of State Bank Supervisors, said that community banks are a different animal than large financial institutions that have been blamed, in part, for the 2008 financial crisis that triggered sweeping financial regulatory reforms known as Dodd-Frank.


"There are differences in banks, and our regulatory approach must also reflect this diversity," she said.


Franks explained that community banks are vital, particularly in rural states like Arkansas where in many towns they are the sole source of banking. For small businesses, farms and start-up companies they are a lifeblood.


"Community banks play an outsized role in lending to small businesses," she said.


Franks appeared on a panel with regulatory officials from the Federal Reserve, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and National Credit Union Administration.


Senate Banking Committee Chairman Richard Shelby, R-Ala., is holding a series of hearings focused on unnecessary laws and regulations that impede financial services. For community banks and credit unions, Shelby suggested that many regulations are too burdensome and unneeded.


"They are long overdue for regulatory relief," he said.


Sen. Elizabeth Warren, D-Mass., cautioned against moving ahead with reforms blindly. She warned that some proposals are being made under the guise of helping small banks when they in fact will benefit larger institutions.


"Big banks are going to use little banks as cover for their roll backs," she said.


After the hearing, Franks said that she was glad to see the committee was interested in implementing changes to relieve the regulatory burden on community banks.


Those regulations can require a rural bank to have to hire additional compliance officers, which is a major expense.


"It’s a big problem complying with new regulations out of Washington," she said.