Too Big to Fail & Systemic Risk (Including Systemic Risk)

The Wall Street financial crisis and government intervention of 2008 affirmed that the nation’s largest megabanks are “too big to fail”—so big and interconnected that the government will not allow them to fail.

As ICBA details in its “End Too-Big-To-Fail” study, too-big-to-fail distorts free markets, incentivizes risky behavior, leaves taxpayers on the hook, and creates unfair competitive advantages for the largest banks. Meanwhile, community banks face oppressive regulatory burdens as a direct result of megabank misdeeds.

A less concentrated and more diverse financial system would decrease systemic risk, improve competition and innovation, and increase the availability of consumer credit. ICBA and the nation’s community banks are dedicated to ending too-big-to-fail.

Articles & Press Releases

Too Big to Jail?

Jan 24, 2013

ICBA’s Fine speaks out on recent “Frontline” episode and expresses need to downsize TBTF institutions

Washington, D.C. (Jan. 24, 2013)— Camden R. Fine, president and CEO of the Independent Community Bankers of America (ICBA), today said  that it’s high time to restore sanity and accountability in our financial system and that too-big-to-fail firms should be downsized and split up. Fine’s comments are a direct reaction to this week’s episode of “Frontline,” which shines a light on possible reasons why the executives running the nation’s largest financial firms who sank our economy and received billions in taxpayer assistance have not been held accountable.
Fine said that the most alarming parts of the piece include revelations that the Justice Department has been hesitant to advance criminal charges because prosecutors are concerned about the impact of lawsuits on large financial institutions. In the episode which aired on Tuesday night, the assistant attorney general of the Justice Department's criminal division acknowledges that he lost sleep at night worrying about the economic fallout that a lawsuit at a large financial institution might create. He said that he felt a responsibility to engage the regulators and other experts and to consider the overall impact on the industry, implying that he took that into account in making decisions regarding indictment.

“If this isn’t a textbook definition of the problem of too-big-to-fail, I don’t know what is. These financial firms are so large and so interconnected that they not only have access to lower-cost funding and to a seemingly limitless taxpayer backstop, but they are also immune from criminal prosecution,” Fine said. “Have we come to a point where we truly have people who are above the law? Are we willing to accept that they are too big to jail? These individuals wrecked our financial system and have been allowed to walk away, bonus checks in hand, like nothing happened, leaving community banks to pick up the pieces under the weight of crushing laws and regulations enacted to halt such reprehensible behavior.”
Fine has been a strong voice in the too-big-to-fail debate since the onset of the financial crisis. As a former community banker, he realizes firsthand how the actions of too-big-to-fail firms can affect Main Street community banks and the communities they serve. 
ICBA as an association has also long advocated for the restructuring of too-big-to-fail firms because of the risks they pose to our nation’s community banks, financial system and economy as a whole.  Just last week the association said it strongly supported Federal Reserve Bank of Dallas President and CEO Richard Fisher’s call to restructure too-big-to-fail financial institutions to reduce risks to the financial system. ICBA also recently thanked the Government Accountability Office 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.
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About ICBA
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

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Senators Crapo and Brown

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