We are grateful to Puriya Abbassi, Fabian Bichlmeier, Magnus Brechtken, Robert Düll, Albrecht Ritschl, and Edgar Vogel for most helpful inputs as well as to Janina Berner for excellent editorial assistance. The paper reﬂects the views of the authors and not necessarily those of the Deut​sche Bun​‐ des​bank. All errors and inconsistencies are our own.
To effectively promote safety and soundness and ensure consumer compliance without creating undue regulatory burden, rules and supervisory approaches should be tailored to different types of institutions such as community banks. The Federal Reserve supervises more than 830 community banks and more than 4,000 holding companies that control small depository institutions. These are banking organizations with total assets of $ billion or less.