Fed’s Jefferson: Stress Among Small, Regional Banks, Could Hit Small Businesses Hardest

Dr. Philip Nathan Jefferson, of North Carolina, nominated to be a Member of the Board of Governors of the Federal Reserve System, listens during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington on Feb. 3, 2022. Ken Cedeno/Reuters

LEXINGTON, Virginia—The shuffling of deposits from small to large banks could have a disproportionate impact on U.S. small businesses that depend heavily on community and regional financial institutions for credit, Federal Reserve Governor Philip Jefferson said on Monday.

“We are focused on the macroeconomy but we are aware ... that there are potential distributional aspects,” if depositors move cash away from smaller banks, Jefferson said.