Fed’s Jefferson: Trouble among small, regional banks could hit small businesses

LEXINGTON, Virginia (Reuters) – The shuffling of deposits from small to large banks could have a disproportionate impact on U.S. small businesses who 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.

Recent banking sector stress has led to declining deposits at smaller institutions and “we are going to have to see how that plays out,” Jefferson said.

(Reporting by Howard Schneider; Editing by Chris Reese)