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 Home > Advocacy
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ICBA Policy Resolutions for 2010
ICBA Priorities for 2010
FINANCIAL REFORM Position ICBA supports the following measures to protect taxpayers and prevent a future economic crisis, and urges Congress to enact them: - End the doctrine of “too big to fail.” Create a Systemic Risk Regulator to identify, monitor and supervise all institutions that pose a potential threat to financial stability. Give the Systemic Risk Regulator the authority to restructure, downsize, and even dissolve, in the most extreme cases, the institutions that fall into this category. Subject systemically dangerous institutions to substantially tougher capital, liquidity and leverage requirements on a graduated basis. Separate traditional banking functions from risky activities such as investment and brokerage.
- Grant the FDIC exclusive receivership, conservatorship and bridge bank authority to operate an insolvent institution, including its holding company and affiliates, and develop a restructuring, downsizing or dissolution plan. Require systemically dangerous institutions to submit an insolvency contingency plan to ensure an orderly dissolution process.
- Apply new systemic risk fees against systemically dangerous companies to protect and compensate taxpayers and the deposit insurance fund from future risk exposure. Institute a pre-funded systemic risk premium on all systemically dangerous holding companies to help defray the cost of enhanced regulation and to pay for the orderly unwinding of the affairs of a failed institution. In addition, FDIC-insured institutions owned by systemically dangerous companies should pay a premium on top of their regular FDIC assessments to compensate the FDIC for the increased risk they pose.
- Allow primary prudential regulators to continue to balance safety and soundness regulation with the need to provide consumers with the information they need to make informed financial decisions and protect them from unfair and harmful practices. Focus new consumer protection efforts on the unregulated “shadow” financial industry. Community banks should not face added regulatory costs or burdens for enhanced regulation of these gap institutions.
- The 10% nationwide deposit concentration cap established by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 should be reduced or at the very minimum strengthened and all loopholes such as exemption for organic growth and the exclusion for thrift deposits should be eliminated.
- Broaden the assessment base used by the FDIC to determine a bank’s premium by including total assets minus tangible equity, rather than domestic deposits, in order to create parity between large and small banks make it more reflective of a bank’s true risk.
- Retain the system of federal and state bank charters and charter choice. Oppose the merger of OTS into OCC but if that agency is eliminated, a division under the OCC should be established to supervise thrift institutions.
- Retain the Federal Reserve’s functions as the primary holding company regulator and a regulatory option for state chartered banks, both of which enhances the Federal Reserve’s ability to conduct sound monetary policy.
- Permanently close the ILC loophole by prohibiting new ILC charters and subjecting existing ILCs to the Bank Holding Company Act.
Background The irresponsible actions of too-big-to-fail Wall Street firms and un-regulated financial services providers brought the U.S. economy to its knees in 2008. Only quick action by Congress and federal regulators prevented a total economic melt-down and perhaps a global depression. Our economy is still suffering the effects of the worst recession since the 1930s. And even though community banks did not contribute to the economic crisis, they are suffering the effects of it through deteriorating loan quality, heavier FDIC assessments, and a suffocating examination environment. Congress must act to ensure that a crisis of this proportion never happens again. Our nation, still reeling under the consequences of reckless and irresponsible risk-taking by too-big-to-fail institutions, can no longer afford to live with the status quo. ICBA supports meaningful and fair regulatory reform to address the systemic danger posed by too-big-to-fail financial companies, both banks and non-banks, and restore the competitive balance between Wall Street and Main Street. Comprehensive financial reform proposals have been drafted by the House, Senate and Treasury, and congressional action is ongoing, with final disposition expected sometime in 2010. We commend congressional and Treasury leaders for these initiatives, and welcome the opportunity to work with Treasury and Congress to address community bank concerns. Our economy needs more than an "early warning" about possible problems; it needs a real cop on the beat to take definitive action when needed. That is why ICBA developed a concrete set of principles and recommendations that are reflected in this resolution. We urge Congress to act on these recommendations at the earliest opportunity. Staff Contacts: Ron Ence and Chris Cole Return to ICBA Policy Resolutions
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