FOR IMMEDIATE RELEASE
ICBA Backs GAO Study of Too-Big-To-Fail
GAO Report Will Focus on Potential Market Distortions and Risks Posed by Megabanks
Washington, D.C. (Jan. 11, 2013)—The Independent Community Bankers of America (ICBA) today thanked the Government Accountability Office (GAO) for agreeing to study potential market distortions caused by too-big-to-fail financial institutions. The study requested by Sens. David Vitter (R-La.) and Sherrod Brown (D-Ohio), would focus on financial institutions with more than $500 billion in consolidated assets.
“ICBA is encouraged that Congress and the GAO are working together to study and address market distortions government support for the largest and riskiest financial institutions may cause,” ICBA President and CEO Cam Fine said. “Gaining much-needed information on the probable market distortion and risks that the largest mega-financial institutions pose by benefiting from government intervention will help taxpayers better understand how these institutions affect our financial system and economy.”
In their bill, introduced in December and passed by the Senate by unanimous consent late last year, Sens. Vitter and Brown asked the GAO to study the economic benefits that too-big-to-fail financial firms receive due to actual or perceived taxpayer support. The GAO will investigate whether banks with more than $500 billion in assets are able to raise funds more cheaply than smaller competitors and have distorted credit ratings because it is widely believed that megabanks have a government guarantee against failure.
This GAO research will help provide much needed transparency on too-big-to-fail. And while the GAO conducts its research, ICBA encourages Congress and regulators to continue examining and addressing the too-big-to-fail market. Doing so will ensure that free-market principles apply across the entire financial system and address market distortions fostered by government involvement and subsidies of the largest megabanks.
The Independent Community Bankers of America®, the nation’s voice for more than 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.