participants were limited to small businesses with 1 to 20 employees, excluding owners, and at least $ 200, 000 but less than $ 2 million in revenue. see board of governors of the federal reserve system, browsing to borrow : “ mom & pop ” small business perspectives on online lenders ( washington : board of governors, june 2018 ), https : / / www. federalreserve. gov / publications / files / 2018 - small - business - lending. pdf. the annual conference is jointly - sponsored by the federal reserve system, the conference of state bank supervisors, and the federal deposit insurance corporation. - 4and five emergency evacuations of montecito, california. 11 within 24 hours of the wildfires and mudslides, the community bank declared an emergency and began executing its disaster response strategy. 12 the bank used a wide range of communication channels, from facebook to text messaging, to keep in touch with its employees and its customers. it created a disaster assistance package for personal and small business borrowers. the bank offered new lines of credit ( including a 24 - hour turnaround on small business lines ). it made payment deferrals on alreadyexisting loans and provided free safe deposit boxes. the bank even delivered more than 15, 000 water bottles and offered more than 1, 500 respirators for local residents at its branches. small businesses value that level of commitment to local customers. and they recognize the benefits of working with local community banks that understand their regions and businesses. the relationship - based nature of community bank lending helps small businesses that often lack the detailed balance sheets or detailed income statements required by larger banks. 13 even when small businesses do have the right paperwork, large banks are still less likely to engage in lending at small bank levels. that ’ s because the transaction costs for underwriting a $ 100, 000 loan are comparable to a $ 1 million loan. none of this is lost on small businesses, which, according to the federal reserve ’ s small business credit survey, continue to express greater satisfaction with small banks compared to both big banks and fintech lenders. 14 see lou whiteman, “ how the ‘ best banks ’ handle the wrath of mother nature, ” american banker, september 4, 2018 ), https : / / www. americanbanker. com / news / how - the - best - banks - handle - the - wrath - of - mother - nature. see also brooke holland, “ in case of emergency

to ensure safety and soundness of banks and consumer protection, while also creating a regulatory environment that does not hinder the integration of responsible innovation into the strategic direction that a bank opts to pursue. here at the federal reserve, i think it ’ s vital that we look closely at our work to make sure we are not hindering prudent innovation between community banks and fintech firms. we u. s. department of treasury, a financial system that creates economic opportunities : nonbank financials, fintech, and innovation ( washington : department of treasury, july 2018 ), https : / / home. treasury. gov / sites / default / files / 2018 - 08 / a - financial - system - that - creates - economic - opportunities - - nonbank - financials - fintech - and - innovation. pdf. “ smaller, nonbank fintech firms and banks have raised concerns that the overall burden of the third - party supervisory regime stifles the ability of new firms to partner with banks.... [ c ] ommunity banks have expressed concern about their capacity to undertake the requisite due diligence and ongoing vendor management ( especially with larger vendors ). ” - 8need to think about how our guidance sets expectations for the way banks should engage third parties. we should explore more effective ways to interact with banks, including through new types of outreach and education. to begin with, i recognize the need to ensure that our outsourcing risk management guidance appropriately reflects the present - day business realities of the banks that we supervise. for instance, regulators ’ third - party risk management frameworks discuss particular types of contractual terms and, where appropriate, audit rights by a bank over its service providers. however, when a community bank is in negotiations with large vendors, such as cloud service companies and core service providers, they may not be in a position to make demands. as the largest vendors grow even larger, this will get even harder for small banks. 22 concerns about compliance can also make it difficult for a community bank to work with small partners. a small fintech firm may lack a traditional financial history, raising questions about how a bank can evaluate the fintech firm ’ s status in the industry, corporate history, or financial condition. it certainly can be difficult for a small bank ’ s staff to evaluate a wide range of potential technology vendors. i am heartened to hear that small banks are increasingly collaborating to vet third - parties. services are also emerging