During a hearing before the Senate Banking Committee today, U.S. Senator Herb Kohl questioned the Chairman of the Federal Reserve, Ben Bernanke on persistent high unemployment and future wage levels. Chairman Bernanke testified before the Banking Committee, on which Kohl serves. Kohl also questioned Chairman Bernanke on the impact of bank consolidation on small business and farm lending with respect to the purchase of Wisconsin's oldest and largest bank, M & I Bank, by Harris Bank. Kohl advocated for continued lending to small businesses and farmers as larger banks move into Wisconsin.
Kohl expressed concern about the lack of hiring in the current economy despite strengthening business profits and the growth in unemployment which can lead to long term consequences.
Bernanke agreed that the growing unemployment was a major problem and recommended that Congress takes a look at ways to help the unemployed. Bernanke also stressed the need to educate our workforce and allow them to get the skills to compete in a increasingly global and technological society.
"One big concern I have with larger national banks moving into Wisconsin is what impact that will have on local customers, small business and farmers. We have seen evidence that mergers of smaller banks can be good for small business. But when large national banks buy smaller banks, small business loans tend to decrease, that is the statistic." Kohl said.
Kohl expressed concern over the recent purchase of M&I Bank by the much larger Harris Bank, which is a subsidiary of the Bank of Montreal. M&I Bank has been a local establishment for 164 years and was Wisconsin's largest and oldest bank.
Kohl asked Chairman Bernanke, "As more national banks acquire regional and community banks, what can be done to ensure that they keep lending to small businesses? Is the Federal Reserve looking at the impacts of consolidation on lending to small business and farmers?"
Chairman Bernanke acknowledged that larger banks are not lending to small businesses at the same rates as community banks. He mentioned the Federal Reserve along with the Department of Justice are involved in approving mergers and acquisitions and they look at the impact to local areas when making their decisions. He stressed the need to make sure there is a place for local businesses to go and the importance having strong community banks.