ICBA - News - News Release - ICBA Applauds New Legislation to Base FDIC Assessment on Assets, Hold “Too-Big-To-Fail” Banks Accountable
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ICBA Applauds New Legislation to Base FDIC Assessment on Assets, Hold “Too-Big-To-Fail” Banks Accountable

Washington, D.C. (June 16, 2009)—The Independent Community Bankers of America (ICBA) today applauded new legislation, the Bank Accountability and Risk Assessment Act of 2009, introduced by Rep. Luis Gutierrez (D-Ill.), chairman of the House Financial Services Subcommittee on Financial Institutions and Consumer Credit, that would broaden the assessment base for FDIC deposit insurance premiums and create a separate risk-based assessment for too-big-to-fail banks that represent a systemic threat to our nation's financial system. The legislation is cosponsored by Rep. Paul Kanjorski (D-Pa.), chairman of the House Financial Services Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises.

“During these challenging economic times, our nation's financial system has been sorely tested. Through it all, more than 8,000 community banks in cities and towns across the country have continued to lend to families and small businesses to help our economy recover,” said Camden R. Fine, ICBA president and CEO. “ICBA thanks Rep. Gutierrez for creating this important legislation, which strengthens the FDIC risk-based premium system and recognizes the difference between Main Street community banks and Wall Street.”

ICBA has been a strong advocate for creating parity between large and small banks by broadening the assessment base used by the FDIC to determine a bank's premium assessment to include total assets (minus tangible equity), not just domestic deposits. This bill also calls for a better assessment of risks presented by depository institutions by requiring the FDIC to examine risks throughout a bank's holding company, when the FDIC establishes rates for a bank. Additionally, the bill requires too-big-to-fail institutions to pay a systemic-risk premium to the FDIC because of the increased risk they pose to the financial system-an important priority that ICBA has called for continually.

“Proportional regulation based on risk is long overdue. This legislation is an important step forward in achieving that. It's only fair the largest financial institutions pay an additional premium,” Fine said. “As this current financial crisis has shown us, the risk to our financial system and economy posed by the failure of one of these mega institutions is too great-and they should have to account for the added risk their size and activities pose-while protecting the Deposit Insurance Fund.”

ICBA looks forward to working with Rep. Gutierrez, Rep. Kanjorski and Congress to quickly pass this vital legislation.

For more information, visit www.icba.org.