FOR IMMEDIATE RELEASE
ICBA Expresses Support for Fed
Washington, D.C. (March 3, 2010)—The Independent Community Bankers of America today sent a joint letter with five other financial services trade groups to Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Ranking Member Richard Shelby (R-Ala.) to express support for maintaining both the Federal Reserve’s monetary-policy and financial-supervision responsibilities in any financial-regulatory-reform proposal.
“We understand that the primary responsibility for the Federal Reserve is monetary policy,” the groups say in the letter. “However, we do not believe the monetary policy role should be separated from financial supervision. We believe that these two responsibilities are essential duties of a central bank.”
Specifically, the letter notes how the Fed’s research and analysis of financial and economic conditions informs its ability to both conduct monetary policy and effectively supervise banks, particularly the large and complex financial institutions that need well-informed, consolidated supervision.
The letter also points out the importance of the 12 regional Federal Reserve Banks in not only helping the Fed with monetary-policy analysis, but in keeping the central bank closely connected to financial and economic conditions throughout the country.
“It is important to remember that the Federal Reserve conducts this important regional outreach by means of its supervision of Federal Reserve member banks of all sizes: large, small, and in between. That is why we support the continuation of the Federal Reserve’s supervision of state chartered banks that are members of the Federal Reserve System,” the letter says. “It would be a mistake to limit the Federal Reserve to supervision of only large, complex institutions headquartered in major financial centers. The Federal Reserve needs a broader regulatory focus to ensure that for both its central bank and regulatory functions it has a clear view of banks of all sizes, from all regions, and from differing types of communities.”
While ICBA and the other groups agree that some improvements are warranted in the financial regulatory system, any proposed changes that undermine either the independence of monetary policy or the Federal Reserve’s supervision of financial institutions will lead to a weaker financial regulatory system.
Joining ICBA in signing the letter were the American Bankers Association, Consumer Bankers Association, Financial Services Forum, Financial Services Roundtable, and Securities Industry and Financial Markets Association.