Washington, D.C. (Sept. 27, 2016)—The Independent Community Bankers of America® (ICBA) today told Congress it supports pending legislation that would improve consumer access to mainstream banking services. Testifying before the House Financial Services Subcommittee on Financial Institutions, ICBA community banker Ronald D. Paul advocated bills supporting access to FDIC deposit insurance to help keep local deposits in local communities.
“Rational, fact-based deposit classification will help community banks fund more lending to keep pace with the strengthening economic recovery,” said Paul, chairman and CEO of EagleBank in Bethesda, Md. “ICBA-supported legislation before the subcommittee will provide security for bank depositors while helping community banks better serve their communities.”
Paul expressed ICBA support for the following bills:
- H.R. 4116, introduced by Reps. Gwen Moore (D-Wis.) and Tom Emmer (R-Minn.), would support the use of reciprocal deposits, in which community banks accept deposits that exceed the $250,000 insurance limit by distributing the excess amount through a network of banks and receiving reciprocal deposits from others in the network. The bill would amend federal law to treat reciprocal deposits as core deposits instead of brokered deposits, a more accurate classification that would better serve customers.
- The Retail Checking Account Protection Act of 2016 (H.R. 5660), introduced by Reps. Moore and Roger Williams (R-Texas), would exclude from the “brokered deposit” definition deposits held by banks’ retail customers. These deposits are stable due to the established relationship between depositors and their banks, and FDIC limitations on their use are counterproductive and harmful to community bank depositors.
“It’s past time to remove the unwarranted stigma attached to reciprocal deposits and any deposits held by retail customers,” Paul said.
The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services.