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Last update: 09/03/14

ICBA News Release

ICBA Independent Community Bankers of America

Media Contact
Aleis Stokes
(202) 821-4457

Media Contact
Karen Tyson 
(202) 821-4454

FOR IMMEDIATE RELEASE

ICBA Announces 2009 Policy Priorities

Phoenix, Ariz. (March 20, 2009)—The Independent Community Bankers of America (ICBA) today announced its top legislative and regulatory priorities for the coming year. ICBA made the announcement at the 2009 National Convention and Techworld, which is the largest community banking industry event of its kind.

“During these economically challenging times, it’s more essential than ever that ICBA promote policies that address the causes of this financial crisis and help create a stronger economy going forward. The majority of our nation’s nearly 8,000 community banks remain strong and stable today and prepared to restore our nation to prosperity – they should not pay the price for a crisis they did not cause. ICBA urges the government to adopt policies that target the practices that led us to the problems we now face, specifically the systemic risk of too-big-to-fail Wall Street institutions and unscrupulous lending practices,” said R. Michael Menzies, incoming ICBA chairman and president and CEO of Easton Bank and Trust, Easton, Md. “ICBA’s focus on these and other issues critical to community banks on Main Street, such as maintaining the separation of banking and commerce, and tempering the bank examination environment, will allow community banks to continue to do what they have always done well—meet the financial needs of their customers in cities and towns throughout America.”

ICBA’s top priorities for 2009 are:

  • Encouraging the government to involve community banks in economic recovery efforts. Any economic recovery proposals should involve community banks to the maximum extent feasible. The government should direct efforts to assist groups that have been hard hit by the economic downturn, including homeowners, homebuyers, renters, workers, and taxpayers; as well as providing assistance to small businesses and municipalities that can create new jobs and rebuild the nation’s infrastructure.

  • Increasing regulatory oversight of large banks, including a “systemic risk premium” to protect taxpayers from future loss. Our nation’s financial system is over-concentrated. Systemic-risk institutions, which are too big or inter-connected to manage, regulate or fail, should either be broken up or required to divest sufficient assets to no longer pose a systemic risk. Congress should order a Government Accountability Office report with recommendations to downsize/ break-up the largest institutions so that they no longer pose systemic risk, and Treasury should establish an Office of Community Financial Institutions to focus on the needs of community banks and the communities they serve.

  • Addressing the inequity between large and small banks in the deposit insurance system. Our nation’s federal deposit insurance system is critical to depositor confidence in the banking system, the protection of small depositors and the funding base of community banks. The FDIC should explore all alternatives for funding the Deposit Insurance Fund in lieu of a special assessment, including borrowing from Treasury or the industry or issuing bonds to temporarily fund the DIF, with the industry repaying the amount borrowed, with interest. The proposed special assessment, when combined with the regular assessment for 2009 which is more than double last year’s regular assessment, will adversely impact most community bank’s earnings and capital and impair their ability to lend money and serve their communities. To create parity between large and small banks, the FDIC should broaden the assessment base under its risk-based insurance system to include all assets (minus tangible capital) and not just domestic deposits. Since large banks hold a proportionately larger share of total banking assets than total domestic deposits, under a broader assessment base large banks would shoulder more of their fair share of the special assessment and any future assessments. ICBA also supports permanently increasing the deposit insurance limits from $100,000 to $250,000 per depositor.

  • Reducing the 10 percent deposit concentration cap, and breaking up large banks so they are no longer too-big or too-interconnected-to-fail. The 10 percent deposit concentration cap established by the Riegle-Neal Act should be reduced, or at the very minimum strengthened, and all loopholes such as the exclusion for thrift deposits should be eliminated. To prevent a recurrence of another financial crisis, Congress should break up the institutions that pose the most systemic risk to our economy or require them to divest sufficient assets so that they are no longer too-big or too-interconnected-to-fail.

  • Opposing inaccurate fair value or mark-to-market requirements. While ICBA supports transparency for financial statements, it opposes fair value or mark-to-market requirements that do not accurately reflect a bank’s financial condition. Smaller financial institutions and smaller businesses will be disadvantaged as domestic accounting standards are converged to international standards created to meet the needs of international investors and companies.

  • Maintaining the separation of banking and commerce. ICBA strongly supports our nation’s long-standing policy prohibiting affiliations or combinations between banks and non-financial commercial firms and urges Congress to close the industrial loan company (ILC) loophole in the Bank Holding Company Act that permits commercial firms to own FDIC-insured banks.

  • Urging a change in the regulatory environment so over-zealous examiners do not stand in the way of sound community bank lending that can help in the economic recovery effort. ICBA will continue to warn regulators that excessively tough exams that result in unnecessary loss of earnings and capital can have a dramatic and adverse impact on the ability of community banks to lend and impair their ability to support economic growth. Since community banks are the prime engine behind small business lending, any contraction of lending will further exacerbate the current economic downturn and impede attempts to initiate a housing recovery.

  • Keeping the Farm Credit System focused on agricultural lending. ICBA adamantly opposes allowing Farm Credit System lenders to become the equivalent of commercial banks but with broad tax-exemptions while retaining tax and funding advantages of their government sponsored enterprise (GSE) status. FCS is seeking a dramatic shift towards general purpose, non-farm lending, and they should stay focused on serving farmers and ranchers. The FCS should be required to work with commercial banks as a funding source and through loan participations.

  • Opposing expanded powers for credit unions and urging Congress to end their unfair and unjustified tax exemption. Tax-exempt credit unions, which will benefit from a stabilized economy, should pay their fair share. ICBA urges Congress to review the tax-exempt status of credit unions in terms of today’s economic realities as it is no longer justified. ICBA opposes expanded powers for credit unions, particularly raising the cap on member business loans, as long as credit unions remain exempt from taxation and the Community Reinvestment Act (CRA). ICBA supports the right of a financial institution to choose the type of charter under which it operates. Credit unions seeking bank-like powers should convert to bank or thrift charters.

  • Community banks are common sense lenders. Despite current market turmoil, community banks are in generally sound condition, have adequate liquidity and are ready to lend – factors essential to assisting their communities’ recovery from unprecedented numbers of foreclosures and a housing market that nearly has come to a standstill. ICBA strongly opposes predatory lending practices and believes these practices should be stopped. Efforts to stop abusive lending practices should not prohibit responsible loan products created to meet the needs of lower income borrowers or first-time homebuyers—these are products that help community banks meet credit needs and support economic development in many communities. ICBA opposes legislation that would allow bankruptcy judges to re-write mortgage contracts for primary residences in Chapter 13 bankruptcy cases.

  • Maintaining the unique nature of the Federal Home Loan Bank system. ICBA supports the regional structure and cooperative nature of the Federal Home Loan Bank system and believes it must be maintained and recognized in regulatory oversight, as it best addresses the diverse needs of its community bank members. The regulator should develop concentration limits for advances for both individual FHLBs and the FHLB system to protect the system’s safety and soundness.

  • Advocating for tax reforms that will be beneficial to community banks, small businesses and consumers. To jumpstart economic activity, ICBA has crafted and advanced specific tax relief proposals focused on helping community banks and their individual and small business customers. ICBA supports legislation that would extend or make permanent the expiring lower tax rates currently applied to individual income and Subchapter S income, dividends and capital gains. ICBA will continue to promote policies that will enhance community banks’ ability to raise capital including allowing S corporation banks to issue preferred stocks and allow IRA investments.

For more information, visit www.icba.org.






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