“This financial and economic crisis has clearly demonstrated the need for meaningful financial regulatory reform that protects America’s taxpayers and the integrity of our financial system. The best way to accomplish this is by ending too-big-to-fail and regulating and enforcing rules on the unregulated financial players. ICBA welcomes the draft legislation released today by Chairman Dodd because it moves financial regulatory reform forward and aims to safeguard future generations by reining in the systemically dangerous institutions that were at the heart of this economic catastrophe.
“Our nation’s nearly 8,000 community banks have always made and continue to make consumer protection a priority. ICBA supports strong consumer-protection regulations on nonbank financial institutions in the draft legislation. ICBA will continue working with Chairman Dodd to ensure that community banks are not disproportionately affected by any new regulator and that new consumer-protection regulations are consistent with safety-and-soundness requirements. However, ICBA does have concerns that the new bureau would not report to the Federal Reserve Board.
“ICBA is also pleased that the bill maintains the dual banking system because maintaining this system allows for critical checks and balances and diversity of financial institutions, promotes consumer choice and is sensitive to financial institutions of various complexity and size.
“ICBA supports the creation of a systemic-risk council that would restrict the size and scope of too-big-to-fail institutions so they never again have the ability to nearly topple our economic system. ICBA also supports the FDIC having full resolution authority for the orderly unwinding of systemically dangerous institutions should they fail. To further safeguard our financial system, ICBA advocates an additional FDIC premium on systemically dangerous financial companies, in addition to their regular FDIC premiums, to compensate the agency for the increased risk they pose.
“ICBA has been a leading advocate for creating parity between large and small banks by supporting measures that would broaden the assessment base used by the FDIC to determine bank premiums by using total assets (minus tangible equity) rather than domestic deposits. These measures were included in the House legislation. Unfortunately, the approach taken to broaden the assessment base in the Dodd legislation would not do enough to ensure parity between large and small banks. ICBA will work to ensure that the House assessment-base provisions are included in any final legislation.
“ICBA looks forward to working with the Senate as the legislation moves forward to address these and any additional concerns so community banks can continue to proudly serve their customers in cities and towns throughout America and help our local economies and our national economy recover and rebuild.”