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 Lauds Brown-Vitter Legislation Taking on Too-Big-To-Fail

Apr 24, 2013

Washington, D.C. (April 24, 2013)— The Independent Community Bankers of America® (ICBA) today expressed its support for new legislation introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) that would help eliminate the threats posed by too-big-to-fail financial institutions. The Terminating Bailouts for Taxpayer Fairness Act of 2013 (TBTF Act, S. 798) seeks to end federal subsidies and funding advantages for financial firms larger than $500 billion in assets and to end government distortions of the financial markets that foster incentives for risky behavior by Wall Street megabanks and put taxpayers at risk.

“ICBA applauds Sens. Brown and Vitter for advancing the debate to bring balance back to the financial services marketplace,” said Bill Loving, ICBA chairman and president and CEO of Pendleton Community Bank in Franklin, W.Va. “By imposing equity capital guidelines that are appropriately scaled to the size, scope and risk of the too-big-to-fail institutions, this legislation will reduce systemic risk, protect taxpayers and put our nation’s community banks on a competitively balanced playing field.”

ICBA strongly supports this legislation and urges all community banks to join the association in advocating passage of legislation to end too-big-to-fail.

In addition to bringing market discipline to the too-big-to-fail banks, the Brown-Vitter bill also offers much-needed regulatory relief to community banks that will allow them to serve consumers and small businesses in their areas. This common-sense relief will let community banks do what they do best—create jobs and serve our nation’s cities, towns and rural areas. The legislation includes an expanded definition of “rural” for purposes of the qualified mortgage definition, an exception to the annual written privacy notice requirement when the financial institution has not changed its policies, relief from certain data-collection requirements and strengthened accountability in bank exams through a workable appeals process, and it allows thrift holding companies to use the new 1,200-shareholder deregistration threshold.

“ICBA looks forward to working with Sens. Brown and Vitter to advance this vital legislation, which will help end the stranglehold of too-big-to-fail on this nation’s financial sector,” said Camden R. Fine, ICBA president and CEO. “Doing so will allow for a truly free market economy where all banks are allowed to succeed or fail based on their merits and not the government picking winners and losers. By supporting market forces and the foundation of our nation’s banking system—capital—the Brown-Vitter bill will help end the too-big-to-fail threat to our 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

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Senators Crapo and Brown

Letters to Regulators

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Federal Reserve, OCC
Federal Reserve, OCC
Federal Reserve Bank of Minneapolis
OCC, Federal Reserve, and FDIC


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