FOR IMMEDIATE RELEASE
ICBA Calls for Additional FDIC Coverage, TARP Access for Mutuals
Washington, D.C. (February 3, 2009)—The Independent Community Bankers of America (ICBA) today urged policymakers to permanently set FDIC deposit insurance at $250,000, extend the FDIC’s special Transaction Account Guarantee Program by two years, extend the Troubled Asset Relief Program’s (TARP) Capital Purchase Program (CPP) to mutual institutions and increase participation in the Federal Housing Administration’s (FHA) Hope for Homeowners program.
“During these financially troubling times, ICBA continues to advocate for a provision that will give the banking industry more time to recapitalize the FDIC Deposit Insurance Fund and permanently increase deposit insurance coverage from $100,000 to $250,000. This national coverage has helped many of our nation’s more than 8,000 community banks continue to serve their customers and remain competitive with larger financial institutions—many of which have needed the government’s help to stay afloat,” said R. Michael Menzies, ICBA chairman-elect and president and CEO of Easton Bank and Trust Company, Easton, Md., in his testimony to the House Financial Services Committee regarding H.R. 703.
Because community banks are the cornerstone of our nation’s economic stability, ICBA also called on the House Financial Services Committee to include a two-year extension of the Transaction Account Guarantee Program. The program has been an extremely useful tool that has enabled community banks to build up liquidity during these challenging times so they can continue to serve their customers.
Menzies said that it’s imperative to realize that community banks did not engage in the practices that led to the current economic crisis and should not be penalized for problems they did not create. While ICBA has had significant concerns with the pace of implementation of the CPP, the association is pleased Treasury released a term sheet for Subchapter S corporation banks last month. ICBA also will continue its efforts to secure a term sheet for mutual institutions interested in the CPP. Allowing all community banks to participate in the program will help boost lending to families and small businesses. Every dollar in new capital community banks raise will help facilitate an additional $7 to $10 of lending in their communities.
Menzies went on to discuss the current challenges in the mortgage market. “Because community banks, by and large, did not engage in the subprime lending practices at the heart of the current crisis, they are not currently experiencing unusual levels of mortgage defaults,” he said. “However, ICBA strongly supports increasing capacity for the FHA to serve homebuyers, homeowners and lenders. FHA is vital to the provision of affordable housing and the recovery of the housing market.”
ICBA appreciates Chairman Barney Frank’s (D-Mass.) leadership in working to find solutions to our nation’s current economic crisis and thanks him for introducing legislation that addresses many of these critical issues. ICBA urges the swift passage of the provisions found in H.R. 703 because they will have a direct impact on the prospects for a strong economic recovery, and will help community banks continue to serve their customers and perform their vital role in cities and towns throughout America.
To read the full testimony, visit www.icba.org.