FOR IMMEDIATE RELEASE
ICBA Statement Regarding Treasury’s Guaranty Program for Money Market Mutual Funds
Washington, D.C. (September 22, 2008)—Cynthia Blankenship, chairman of the Independent Community Bankers of America (ICBA), and vice chairman and chief operating officer of Bank of the West, Grapevine, Texas and Camden Fine, ICBA president and CEO, issued the following joint statement on changes to Treasury's Guaranty Program for Money Market Mutual Funds:
"Yesterday, the U.S. Treasury responded to ICBA and its community bank members when it clarified that the Guaranty Program for Money Market Mutual Funds would only provide coverage to shareholders for amounts held in such funds as of the close of business on Sept. 19, 2008. This should eliminate any incentive for community bank customers to move their money out of community banks and into money market mutual funds (MMMFs). Without this change, ICBA is convinced that deposits would have flowed out of community banks and out of the communities they serve, severely impacting local credit needs and undermining national economic growth.
"With respect to the Guaranty Program, ICBA will be working to ensure that:
- The rates that Treasury will charge MMMFs will be comparable to the assessments that community banks now pay and have paid in the past for FDIC insurance and that they will adequately fund the insurance risks of the Program;
- The Guaranty Program is only temporary; and
- MMMFs will be subject to the same type of supervision and regulation that banks are subject to.
"Nearly 2,500 community bankers have responded to an Action Alert from ICBA by sending more than 7,500 letters to Congress to express their concerns about Treasury's money market mutual fund proposal. ICBA will continue to work with lawmakers and regulators to ensure that the nation's community banks are heard and not adversely impacted by measures that seek to address a crisis that they did not cause.
"Community banks are the foundation of our nation's local economies. They work hard to serve their customers and communities by reinvesting local deposits into their communities through financial services and loans to their customers, many of them small businesses that are struggling in this current credit environment. Treasury's changes to the Guaranty Program are a step forward to allowing local deposits to continue to stay invested in local communities, providing stability at this time of financial turmoil."