FOR IMMEDIATE RELEASE
ICBA Lauds Passage of Key Amendments to Broaden Assessment Base and Protect Taxpayers
Gutierrez-Manzullo Amendment Would Ensure Too-Big-To-Fail Firms Pay Their Fair Share
Washington, D.C. (November 19, 2009)—The Independent Community Bankers of America (ICBA) today lauded the House Financial Services Committee for passing critical amendments, including the Gutierrez-Manzullo and Kanjorski amendments, to the Financial Stability Improvement Act (H.R. 3996), which would promote deposit insurance fairness, protect America’s taxpayers and put an end to too-big-to-fail. ICBA also praised Reps. Luis Gutierrez (D-Ill.) and Donald Manzullo (R-Ill.), as well as Rep. Paul E. Kanjorski (D-Pa.), for proposing these key amendments that would create long-overdue parity between common-sense community banks and Wall Street, and ultimately, help community banks continue to serve the needs of their communities for generations to come.
“ICBA commends the House Financial Services Committee and Chairman Barney Frank (D-Mass.) for passing amendments that would make the financial system more equitable and hold too-big-to-fail firms—the culprits of our economic woes—accountable for the risks they pose to America’s taxpayers and our nation’s economic system,” said Camden R. Fine, ICBA president and CEO. “The financial crisis has shown us that the fallout from failure of one of these mega-institutions is too great and we must account for the added risk their size and activities pose. The ICBA-inspired Gutierrez-Manzullo amendment will ensure that these institutions pay their fair share.”
ICBA has been a leading advocate for creating parity between large and small banks. The association led the effort to broaden the assessment base and proposed that the FDIC determine bank premium assessments by including total assets (minus tangible equity), not just domestic deposits. The bill now includes this key ICBA proposal, which would allow the FDIC to examine risks throughout a bank’s holding company and would remove any barrier to the FDIC considering the amount of a bank’s assets and liabilities when determining the bank’s risk rating. The amendment also would lift the hard cap on the DIF reserve ratio to allow the FDIC to build up the fund to protect taxpayers. “ICBA thanks Reps. Gutierrez and Manzullo for proposing the amendment and for their ongoing support of community banks by advocating so tirelessly for deposit insurance fairness,” said Fine.
In addition to the Gutierrez-Manzullo amendment, ICBA fully backed Rep. Gutierrez’s separate amendment that would create a pre-funded systemic resolution fund for the orderly unwinding of a failed large financial company that threatens the financial sector and the national economy. A pre-funded systemic resolution fund, which would avoid pro-cyclical effects of tapping the industry during times of financial stress, has a number of advantages over a post-event funding system. It would place the cost on the largest financial institutions that may later fail, rather than only on institutions that have not failed, providing an important equitable balance. It would also hold too-big-to-fail institutions accountable for future risks and ensure America’s taxpayers won’t be left holding the tab for problems they didn’t create.
Moreover, ICBA thanks Rep. Kanjorski for his amendment that would rein in too-big-to-fail institutions. The amendment would provide 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. It would also establish objective standards to determine if a company is systemically dangerous and allow the council to step in and order measures to reduce risk, including dismantling firms whose failure would put the entire economy at risk.
ICBA will continue to work with the House Financial Services Committee to ensure that this crucial legislation is swiftly passed when the committee reconvenes on Dec. 1.
For more information about ICBA, visit www.icba.org. For more information about ending too-big-to-fail, visit www.mycommunitymybank.org.