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ICBA Testifies before FDIC on Rulemaking Petition to Preempt State Laws
Questions Whether Regulation is the Answer

Washington, D.C. (May 24, 2005) - The Independent Community Bankers of America (ICBA) told the Federal Deposit Insurance Corporation (FDIC) today that the balance between federal and state banking systems needs to be restored since a viable dual banking system ensures the overall health of our nation's economy, but it is not sure whether the recommendations in the Financial Services Roundtable's petition are the appropriate solutions.

"ICBA questions whether the petition goes too far," said Karen Thomas, ICBA executive vice president, government relations, "and whether a regulatory forum is the right one to determine these questions, or whether they should be determined in the legislative arena after full public debate." ICBA neither supports nor opposes the recommendations in the petition at this time, Thomas testified.

"Ensuring that larger multi-state, state-chartered banks retain their state charters may be critical to preservation of the dual banking system," Thomas said. But ICBA is concerned about the competitive inequities between banks that will result from the proposed preemption of state laws in the petition. "Single-state, state-chartered banks discontented with this result can always convert to national charters," she said, "which puts us back where we started, with the dual banking system out of balance and further centralization of bank regulation and supervision."

"The petition highlights the complexities surrounding the issue of what laws - state, national or both - should be applicable to a national bank or a state-chartered bank conducting activities in more than one state," said Thomas. "As the banking industry continues to evolve, the marketplace changes, industry concentration increases and nationwide or region-wide operations become more and more dominant, these questions are becoming even more difficult."

Thomas said that the petition points to the challenge of creating rules to maintain a competitive balance in the dual banking system. "ICBA believes we must widen the debate and dialogue on these issues to find solutions that serve consumers and businesses well, preserve balance in the dual banking system, and promote the health and vitality of the banking sector and the nation's economy," she continued.

View the entire statement at www.icba.org/pressroom, and click on Testimony.

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