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ICBA Statement on Senate Passage of Wall Street Reform Bill

Washington, D.C. (May 20, 2010)—Independent Community Bankers of America (ICBA) Chairman Jim MacPhee, CEO of Kalamazoo County State Bank in Schoolcraft, Mich., and Camden R. Fine, ICBA president and CEO, issued this statement today following Senate passage of S.3217, the Restoring American Financial Stability Act of 2010. 

“The recent financial and economic crisis clearly demonstrates that some reform of Wall Street is needed to safeguard our financial system and the nation’s taxpayers from a future catastrophe. ICBA appreciates that this legislation includes measures that hold accountable the too-big-to-fail megafirms and nonbanks that were the root cause of this crisis—measures for which ICBA has been a leading proponent.  ICBA thanks Senate Banking Committee Chairman Christopher Dodd (D-Conn.) for his leadership on this legislation and for considering the needs of our nation’s nearly 8,000 Main Street community banks.

“ICBA appreciates the Senate's recognition of the differences between Main Street and Wall Street by ensuring megabanks pay their fair share for the risk they pose to the FDIC’s Deposit Insurance Fund (DIF), and ultimately our entire financial system.  This is a major victory for ICBA and community banks.  This measure will alleviate the disproportional burden on community banks, will reduce the assessments of 98 percent of banks with less than $10 billion in assets and will keep nearly $4.5 billion in community banks and their communities over the next three years—something that is critical to aiding America’s economic recovery. ICBA thanks Sens. Jon Tester (D-Mont.) and Kay Bailey Hutchison (R-Texas) for their efforts to create much-needed parity between large and small banks.

“ICBA still has grave concerns about a separate Consumer Financial Protection Bureau (CFPB).  While we appreciate that community banks will have some exemptions from the proposed CFPB, the changes do not go far enough.  We are disappointed that further changes were not included in the legislation.  Community banks have always viewed consumer protection as a cornerstone to their business model, so it makes sense that the CFPB focus on those too-big-to-fail and shadow institutions that were at the heart of the financial crisis.  ICBA will continue to work for additional revisions to the CFPB. 

“ICBA is pleased that the bill maintains the Federal Reserve’s examination authority over state member banks, which allows the regional Federal Reserve Banks to keep their finger on the pulse of the Main Street communities that community banks serve each and every day.  These communities have diverse regional economies, and the insights provided by the current system are crucial to the ability of the Federal Reserve to exercise its monetary functions and gauge the impact of banking regulations across various institutions.  ICBA thanks Sens. Kay Bailey Hutchison (R-Texas) and Amy Klobuchar (D-Minn.) for their efforts to maintain the Fed’s examination authority.

“While ICBA is pleased with several measures in the Wall Street reform bill, we continue to have critical concerns with language that will inadvertently harm Main Street community banks.   ICBA opposes the interchange language that will harm community banks that offer credit and debit card products to their customers. The current interchange system makes it possible for small community bank issuers to serve their customers because card networks apply the same interchange rates for small issuers that they do for large issuers.  By reducing interchange fees through government regulation, consumers will face higher costs through annual fees and increasing interest rates, as well as fewer choices as community banks are forced to exit the market, thereby leaving consumers with few options and ultimately forcing them to use cards provided by the megabanks. 

“ICBA also has significant concerns with language that was originally intended to ensure that large banks and bank holding companies would have to meet capital standards that are as strict as those that apply to small banks and bank holding companies.  However, the language is worded broadly enough so that it excludes capital instruments such as trust preferred securities from the consolidated Tier 1 capital of bank holding companies.  This will cause serious harm to community bank holding companies and their underlying banks—the very institutions it originally aimed to avoid burdening.  ICBA will work with the House and Senate to ensure that these onerous measures are not included in the final legislation. 

“ICBA looks forward to working with the Senate and House to ensure that the final legislation contains meaningful measures that hold Wall Street accountable and allow Main Street community banks to continue to fulfill the needs of their local customers and communities.”