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: Survey Shows Americans Want Washington to Address Too-Big-To-Fail Problem

Mar 21, 2013
NewsReleaseHeader2015


Washington, D.C. (March 21, 2013)—Independent Community Bankers of America® (ICBA) Chairman Bill Loving, president and CEO of Pendleton Community Bank in Franklin, W.Va., today released this statement following the release of a Rasmussen Reports survey that found that half of all U.S. adults favor breaking up the nation’s largest banks. According to the survey, 50 percent of U.S. adults said they favor a plan to break up the 12 largest megabanks, which control 69 percent of the banking industry. Only 23 percent were opposed to downsizing the too-big-to-fail megabanks. Further, 55 percent said the government should let too-big-to-fail banks go out of business if they can no longer meet their obligations.

“The American people understand that the too-big-to-fail problem must be addressed to ensure a more robust economic recovery and to prevent the next financial crisis. With continuing reports of the abuses of too-big-to-fail institutions and the favorable treatment they receive to continue operating on Wall Street, Americans have rightly concluded that the nation’s largest banks and the systemic risks they pose must be reined in.

“The too-big-to-fail status of the megabanks contributes to risky behavior on Wall Street, distorts financial markets and puts taxpayers at risk. It also has a direct impact on community banks and the communities they serve by causing stricter regulations across the banking industry, which diverts resources away from Main Street and toward regulatory red tape.

“ICBA supports breaking up the largest financial firms to fully address the too-big-to-fail problem. Restructuring these institutions will allow us to remove their taxpayer-funded backstop, restore truly free financial markets and provide for long-term economic recovery. And only by truly addressing the too-big-to-fail problem can we better manage systemic risk and stop the seemingly never-ending river of regulations.”

For more information, visit www.icba.org.

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 www.icba.org.


Letters to Congress

Title Recipient Date
Senators Crapo and Brown
09/12/2017

Letters to Regulators

Title Recipient Date
Federal Reserve, OCC
06/12/2018
Federal Reserve, OCC
05/08/2018
Federal Reserve Bank of Minneapolis
01/17/2017
OCC, Federal Reserve, and FDIC
08/03/2016

Testimonies

Title Committee Presenter Date

Summaries

Title Content Type Date