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

ICBA: Senate Report Shows Continued Threat of Too-Big-To-Fail

Mar 15, 2013

Report Finds Insured Deposits Used in JPMorgan ‘London Whale’ Loss

Washington, D.C. (March 15, 2013)—Bill Loving, chairman of the Independent Community Bankers of America® (ICBA) and president and CEO of Pendleton Community Bank in Franklin, W.Va., and Camden R. Fine, president and CEO of ICBA, today issued this statement following the Senate Permanent Subcommittee on Investigations report that JPMorgan Chase used federally insured deposits for high-risk trades that resulted in hundreds of millions of dollars in losses it hid from regulators and taxpayers.

“The Senate Permanent Subcommittee on Investigations report on JPMorgan Chase demonstrates the dangers of subsidizing too-big-to-fail financial institutions. Not only did JPMorgan use federally insured deposits to fund a portfolio of complex financial instruments used for high-risk, short-term trades, it misinformed investors, regulators, lawmakers and taxpayers about the nature of the ‘London Whale’ losses.

“This failure of oversight and risk management is yet another example of the moral hazard and reckless risk-taking that results when financial institutions are so large and complex that they enjoy an explicit government guarantee against failure. JPMorgan took significant risks with its $157 billion portfolio of synthetic credit derivatives funded in part with federally insured deposits, hid its losses, and dodged the limited regulatory inquiry that followed.

“Combined with recent testimony from U.S. Attorney General Eric Holder that the size of too-big-to-fail financial firms inhibits Justice Department prosecutions on Wall Street, the nation is again witness to the fact that the largest and most complex financial institutions play by a different set of rules than the rest of us. Too-big-to-fail and too-big-to-jail megabanks should not be allowed to operate above the law and engage in highly risky and complex financial gambles with the support of the federal safety net, while too-small-to-save community banks are left to pick up the pieces on Main Street.

“The nation’s financial institutions should be required to operate on a level playing field. Too-big-to-fail and too-big-to-jail financial giants should be downsized and split up to reduce systemic risks, restore accountability in our financial system, and provide for a safer and more economically sound financial system.”

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About ICBA 
The Independent Community Bankers of America®, the nation’s voice for nearly 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

Letters to Congress

Title Recipient Date
Senators Crapo and Brown

Letters to Regulators

Title Recipient Date
Federal Reserve, OCC
Federal Reserve, OCC
Federal Reserve Bank of Minneapolis
OCC, Federal Reserve, and FDIC


Title Committee Presenter Date


Title Content Type Date