FOR IMMEDIATE RELEASE
ICBA Supports Legislation That Gives FDIC Authority to Resolve Mega-Banks
Washington, D.C. (July 31, 2009)—The Independent Community Bankers of America (ICBA) today voiced support for The Resolution Reform Act of 2009 (S. 1540), introduced yesterday by Sens. Mark Warner (D-Va.) and Corker (R-Tenn.), which gives the FDIC authority to resolve, or wind down, bank holding companies including those that pose a threat the entire financial system-a measure that is in line with ICBA's key policy priorities.
“ICBA appreciates the efforts of Sens. Warner and Corker for introducing this important legislation, which will give the FDIC authority to rein in bank holding companies that pose a systemic risk to the financial system and, ultimately, America's taxpayers,” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “This measure will help ensure systemically risky intuitions are held accountable for their actions and no longer leave Main Street community banks, their customers and their communities bearing the burden for others' mistakes. There is no question that the FDIC is the agency best equipped to handle the resolution of these firms.”
The Resolution Reform Act of 2009 would extend the FDIC's authority, putting a bank holding company into the hands of the FDIC if the bank (insured depository institution) within the holding company structure needs to be resolved. The bank holding company would be moved into receivership, the pieces would be sold off and the company would no longer exist.
While the bill does not address “systemic” resolution in detail, it is an important first step towards eliminating the practice of propping up failed financial institutions.
ICBA looks forward to working with the Senate and the FDIC to advance this important legislation.