FOR IMMEDIATE RELEASE
ICBA Praises Reps. Kanjorski and Perlmutter for Amendments That Prevent Future Bailouts, End Too-Big-To-Fail
Washington, D.C. (November 18, 2009)—The Independent Community Bankers of America (ICBA) applauds Reps. Paul E. Kanjorski (D-Pa.) and Ed Perlmutter (D-Colo.) for proposing ICBA-backed amendments during the House Financial Services Committee markup of the Financial Stability Improvement Act (H.R. 3996) that will help prevent future bailouts, protect taxpayer dollars and put an end to too-big-to-fail.
“Our nation’s more than 8,000 community banks are relationship lenders that didn’t participate in the risky practices that led our economy into a violent tailspin one year ago. ICBA remains committed to ensuring that the irresponsible actions of a few systemically dangerous institutions never again wreak havoc on the communities our nation’s more than 8,000 community banks so proudly serve,” said Camden R. Fine, ICBA president and CEO. “ICBA thanks Reps. Kanjorski and Perlmutter for proposing these vital amendments, which recognize community banks as responsible lenders and help put an end to too-big-to-fail.”
The first amendment, offered by Rep. Kanjorski, provides the Financial Services Oversight Council with authority to take responsible preventive actions to protect the financial system when financial companies are found to be systemically dangerous. The amendment establishes objective standards to determine if a company is systemically dangerous and allows the council to step in before the company goes into receivership. Under the Kanjorski language, the council would consider not only the size of the institution, but the scope and nature of its activities, its credit exposures and inter-connectedness and its leverage ratios. If the company is considered systemically dangerous, the council could take a number of actions to reduce its risk to the financial system, including, in the most extreme cases, breaking up the company.
The second amendment, offered by Rep. Perlmutter, would strengthen the mitigation options available to the council when dealing with a financial company that poses a systemic risk. It would enable the council to require financial companies to divest their commercial or investment activities to reduce their overall risk exposure. ICBA sees this as a responsible method that will essentially reinstate Glass-Steagall restrictions, which were repealed in 1999, on a case-by-case basis.
“Both the Kanjorski and the Perlmutter amendments will go a long way to assuring taxpayers that their hard-earned dollars will never again be used to prop up or bail out companies that abuse their public trust by engaging in risky activities that pose a threat to the economy,” said Fine.