ICBA News Release
FOR IMMEDIATE RELEASE
ICBA Agrees That Too-Big-To-Fail Firms Should Be Restricted
Supports Efforts to End Dangerous Overconcentration, Protect Taxpayers and Dual Banking System
Washington, D.C. (January 21, 2010)—R. Michael Menzies, chairman of the Independent Community Bankers of America (ICBA) and president and CEO of Easton Bank and Trust Co., Easton, Md., and Camden R. Fine, ICBA president and CEO, issued the following statement regarding President Obama’s efforts to impose risk and size limits on the nation’s systemically dangerous too-big-to-fail institutions.
“For more than 20 years, ICBA has continually warned policymakers that the financial services system was becoming dangerously overconcentrated. It’s not safe or healthy to have four financial institutions controlling nearly half of our nation’s banking assets. If anything, the current financial crisis has increased the danger of too-big-to-fail because megabanks have only gotten larger. ICBA supports steps to hold these firms accountable for the risks they pose to our economy and the American people.
“ICBA has said that ending the too-big-to-fail policy is one of the most urgent goals facing the nation and the only way to truly protect consumers, small businesses and the economy. Institutions that are so large and so complex that their failure would pose a grave threat to the financial system, taxpayers and economy must be eliminated to avoid future financial crises. Financial regulators must be given the authority to restructure, downsize and even dissolve, in the most extreme cases, the institutions that fall into this category.
“Additionally, ICBA supports two types of systemic-risk fees that would hold systemic-risk institutions accountable and, ultimately, protect and compensate taxpayers and the FDIC Deposit Insurance Fund from future risk exposure. First, Congress should impose a systemic-risk premium on all systemically dangerous holding companies to help defray the cost of enhanced regulation of these companies and to pay for the orderly unwinding of the affairs of any of these institutions should they fail. Second, Congress should require all FDIC-insured affiliates of systemically dangerous financial companies to pay a systemic-risk premium to the FDIC in addition to their regular FDIC premiums to compensate the agency for the increased risk they pose.
“ICBA has sent our proposals for dealing with the systemically dangerous firms to both the House and Senate. Together with President Obama’s proposals limiting the size of these mega financial firms, we urge Congress to deal with this too-big-to-fail problem once and for all so the nation’s community banks, which never participated in the risky practices that led to the financial crisis, and America’s taxpayers never again have to pay for and suffer through another catastrophic financial meltdown.”
ICBA also sent a letter today to Banking Committee Chairman Christopher Dodd (D-Conn.) and ranking member Richard Shelby (R-Ala.) expressing support for their efforts to advance financial regulatory reform legislation intended to end too-big-to-fail and protect taxpayers, consumers and the dual banking system.
To read ICBA’s letter, visit www.icba.org.