“Congress has nearly completed work on the most monumental financial regulatory overhaul legislation since the Great Depression. This financial and economic crisis has clearly demonstrated that reform of Wall Street is needed to safeguard our financial system, the nation’s taxpayers and our communities from a future catastrophe. ICBA has grave concerns with some sections of the final bill and opposed them throughout the process, but we are pleased that the bill also includes many other provisions that we have long advocated.
“While the bill could go further to restructure megafirms and hold nonbanks that were the root cause of this crisis accountable, it does include powerful language that will help rein in these culprits from their excessive size and risks they pose to our financial system. In particular, ICBA is pleased that Congress adopted a version of the Volcker Rule that will bar megabanks from propriety trading and investing in or sponsoring a hedge fund or private-equity fund. Ultimately, this will help prevent major financial firms from putting customers, taxpayers and the financial system at risk by conducting risky activities solely for their own profit.
“ICBA also appreciates that Congress recognizes the differences between Main Street community banks and Wall Street by ensuring megabanks pay their fair share for the risk they pose to the FDIC’s Deposit Insurance Fund (DIF), and ultimately our entire financial system. The change in the deposit insurance assessment base, which ICBA advocated, will save community banks roughly $4.5 billion over the next three years—capital that will be reinvested in the communities they serve. ICBA is pleased that other measures such as the permanent increase in the FDIC insurance limit to $250,000 and the extension of the Transaction Account Guarantee (TAG) program for an additional two years were also included in the bill. Many other sections of the bill recognize the value of a tiered regulatory system that differentiates between small and large banks. Additionally, ICBA is pleased that conferees modified an amendment that would have prevented all financial institutions from including trust-preferred securities in their Tier 1 capital. With the modification, bank holding companies with less than $15 billion in assets, and institutions organized as mutual holding companies, will be able to grandfather the TruPS they issued before May 19, 2010. These provisions will go a long way to help community banks continue to do what they do best—serve the needs of their local communities.
“However, ICBA is gravely disappointed that debit interchange language was included in the bill. This ‘compromise’ proposal will only compound the harm to consumers and Main Street by imposing new and onerous burdens on debit card issuers, and will fail in any way to adequately account for the significant operational costs and losses incurred by community banks due to fraud and merchant data breaches. Now is not the time to change a proven interchange system just so big-box merchants can reap higher profits and pass their costs of doing business on to America’s consumers. Consumers have already suffered enough thanks to this economic crisis that was triggered by too-big-to-fail.
“ICBA also continues to have serious concerns about a separate Consumer Financial Protection Bureau (CFPB). While we appreciate that community banks will have some exemptions from the proposed CFPB, we fought hard for further changes and are disappointed that further changes were not included in the legislation. Community banks have always viewed consumer protection as a cornerstone to their business model, so it makes sense that the CFPB focus on those too-big-to-fail and shadow institutions that were at the heart of the financial crisis.”