FOR IMMEDIATE RELEASE
ICBA Supports Administration’s Efforts to Rein in Systemic-Risk Institutions, Voices Serious Concerns with Other Aspects of the Plan
ICBA’s Fine Attends White House Announcement on Behalf of Nation’s Community Banks
Washington, D.C. (June 17, 2009)—The Independent Community Bankers of America (ICBA) voiced both support and concern regarding several of the proposals outlined today by President Obama in his administration’s financial services regulatory reform plan.
“As our country continues to weather economic hardship, ICBA and our nation’s more than 8,000 community banks look forward to working with the Obama administration to build a more effective and robust system of financial regulation so that community banks never again have to pay the price for the reckless practices of certain players in the financial services sector,” said R. Michel Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “Even in the midst of this turmoil, the vast majority of our nation’s community banks continue to be well-capitalized financial institutions. As common-sense lenders that did not engage in the risky practices that led to the current economic crisis, community banks continue to lend to families and small businesses in cities and towns throughout America.”
ICBA appreciates the Obama administration’s commitment to transparency and accountability and supports several key recommendations in its regulatory reform plan. Specifically, ICBA applauds the administration for maintaining multiple federal banking agencies and the dual banking system, with its state and federal charters, which promote consumer choice, diversity of financial institutions and sensitivity to financial institutions of various complexity and size.
ICBA applauds the administration for giving the FDIC resolution authority for unwinding the big firms and stepping up efforts to rein in systemic-risk financial institutions by imposing higher capital and liquidity requirements, as well as increased consolidated supervision by the Federal Reserve, and the administration’s efforts to strengthen the wall separating banking and commerce by closing the ILC loophole.
“As this current financial crisis has shown us, the risk to our financial system and economy posed by the failure of one of these mega-institutions is too great—and they should have to account for the added risk their size and activities pose,” said Camden R. Fine, ICBA president and CEO, who attended the president’s announcement today at the White House on behalf of the nation’s community banks. “The steps outlined today by the Obama administration to rein in systemic-risk institutions will serve as a safeguard for the future so these megabanks don’t become so large and unwieldy that they have the potential to yet again threaten our entire banking system and national economy.”
ICBA voiced grave concern, however, about the Obama administration’s plan to establish a separate financial products safety agency with authority to supervise and examine mortgage companies and financial institutions. Such an agency would not have the big picture view that banking regulators have. The bank safety and soundness regulators have developed practical expertise in balancing the safe and sound operation of FDIC-insured institutions with the need to provide consumers protection from unfair and harmful practices, and this perspective should not be lost. Without attention to safety and soundness, the agency is likely to promulgate burdensome regulations that make many safe financial products, which are beneficial to consumers, unobtainable or too costly to offer. Community banks pride themselves on the safety and soundness of the loans they make, and it’s unnecessary that their customers be penalized for the poor practices of a few.
Additionally, ICBA has concerns regarding the proposal to merge the Office of Thrift Supervision (OTS) into the Office of the Comptroller of the Currency (OCC) and the elimination of the federal thrift charter, but if the OTS and the OCC merge, at a minimum, the federal thrift charter should still survive and be subject to supervision and regulation by a separate division within the OCC.
“On behalf of the nation’s community banks, ICBA looks forward to working with the Obama administration and Congress to ensure the regulatory reform plan preserves and maintains our nation’s financial system so it and our nation’s common-sense community banks are even stronger coming out of this economic crisis,” said Fine.