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ICBA Supports Current Banking Structure; Asks for Less Regulations to Enhance Competitiveness

Washington, D.C. (Dec. 19, 2007)—The Independent Community Bankers of America (ICBA) called on the government to reduce regulatory burden to enhance competitiveness rather than restructure the nation's bank regulatory system. ICBA made its comments in a letter to the U.S. Treasury Department, which is reviewing the financial institutions regulatory structure and plans to release recommendations early in 2008.

"The goals of competitive capital markets and an efficient regulatory system are important ones that ICBA supports," said Karen Thomas, ICBA executive vice president and director of government affairs. "But from the community bank point of view, the problem is not that we have too many regulators, it's that we have too many regulations. Meaningful regulatory relief would go a longer way towards enhancing the competitiveness of community banks than would reform of the bank regulatory structure."

ICBA also made the following points in its letter:

  • A monolithic federal regulator would be dangerous and unwise. The success of our diverse financial system is due to our innovative regulatory structure with multiple regulators that provide checks and balances on each other.
  • Multiple charters financial institutions can choose from are essential for maintaining an innovative and resilient regulatory system.
  • The Office of the Comptroller of the Currency and the Office of Thrift Supervision should remain separate.
  • The states play an important role in supervising the institutions chartered under state authority and the dual banking system should be maintained.

The dual banking system has served our nation well for nearly 150 years. While the lines distinguishing state and federally chartered banks have blurred in the last twenty years, community banks value the productive tension between state and federal regulators. One of the distinct advantages of the current dual banking system is that it ensures community banks have a choice of charters and the supervisory authority that oversees their operations, ICBA said.

"Community banks play a vital role in the economic well being of countless individuals, neighborhoods, businesses, organizations and communities throughout the country and are the key sources of credit to small businesses, the job-creating sector of our economy," said Thomas. "Public policy should promote the competitiveness and efficiency of community banks and support and encourage a diverse financial system."

Read ICBA's complete letter at www.icba.org.