The Wall Street financial crisis and government intervention of 2008 affirmed that the nation’s largest megabanks are “too big to fail”—so big and interconnected that the government will not allow them to fail.
As ICBA details in its “End Too-Big-To-Fail” study, too-big-to-fail distorts free markets, incentivizes risky behavior, leaves taxpayers on the hook, and creates unfair competitive advantages for the largest banks. Meanwhile, community banks face oppressive regulatory burdens as a direct result of megabank misdeeds.
A less concentrated and more diverse financial system would decrease systemic risk, improve competition and innovation, and increase the availability of consumer credit. ICBA and the nation’s community banks are dedicated to ending too-big-to-fail.