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ICBA Applauds House Approval of Financial Rescue Bill

Washington, D.C. (Oct. 3, 2008)––The Independent Community Bankers of America (ICBA) applauded the House of Representatives for approving today much-needed financial rescue legislation addressing key Main Street concerns. The Emergency Economic Stabilization Act of 2008 (H.R. 1424) includes critical ICBA-crafted provisions. President Bush has pledged to quickly sign the legislation into law.

“ICBA and our nation’s community banks are grateful that Congress has approved this critical legislation that will bring relief to the credit markets and benefit the people, small businesses and communities throughout Main Street America,” said Cynthia Blankenship, chairman of ICBA, and vice chairman and chief operating officer of Bank of the West, Grapevine, Tex. “Community banks did not create the problems that have led to the current economic and credit market turmoil, but this legislation will help us do everything we can to help get our nation out of these financial troubles. ICBA and community banks look forward to the president quickly signing the measure into law.” 

The bill, which addresses key Main Street and community bank priorities, will:

  • Increase the FDIC insurance limit on deposits from $100,000 to $250,000 through Dec. 31, 2009.
  • Ensures community banks will have access to the Troubled Assets Relief Program (TARP) to sell problem mortgage assets;
  • Allows community banks to take losses against ordinary income for Fannie Mae and Freddie Mac preferred share losses;
  • Authorizes the Securities and Exchange Commission to suspend mark-to-market accounting rules;
  • Provides that TARP may be used to assist community banks that suffered the most serious impact to capital as a result of losses on Fannie and Freddie preferred stock;
  • Prohibits the Treasury from establishing future guarantee programs for money market mutual funds; and
  • Allows the Federal Reserve to pay interest on so-called bank “sterile reserves” beginning Oct. 1, 2008, three years earlier than previously permitted.

ICBA, working with a coalition of other organizations, also successfully overturned efforts to include provisions that would have permitted bankruptcy judges to reduce, or “cram down,” mortgages involved in bankruptcy proceedings. The provisions would have allowed judges to arbitrarily reduce balances owed on mortgages and rewrite mortgage terms.

ICBA especially thanks the leadership of House Speaker Nancy Pelosi (D-Calif.), House Financial Services Chairman Barney Frank (D-Mass.) and Ranking Member Spencer Bachus (R-Ala.), Majority Leader Steny Hoyer (D-Md.), Minority Leader John Boehner (R-Ohio), Majority Whip Jim Clyburn (D-S.C.), Minority Whip Roy Blunt (R-Mo.), Minority Chief Deputy Whip Eric Cantor (R-Va.), Ways and Means Chairman Charles Rangel (D-N.Y.) and many others who have been helpful in the process.