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: Greatest Threat to Financial System is Too-Big-To-Fail

Jun 26, 2013

Washington, D.C. (June 26, 2013)—The Independent Community Bankers of America® (ICBA) today told Congress that the greatest ongoing threat to the safety and soundness of the U.S. financial system is the dominance of a small number of too-big-to-fail megabanks. In a statement for today’s House Financial Services Committee hearing on taxpayer-funded bailouts, ICBA wrote that a more diverse financial system would reduce risk and promote competition, innovation and the availability of credit to consumers and businesses.

“Addressing the threat posed to taxpayers, our financial system, and the economy by a few too-big-to-fail firms is a top priority for community banks,” ICBA wrote. “The U.S. will not have a robust and truly competitive market for financial services until the too-big-to-fail problem is definitively resolved.”

ICBA’s statement notes that four years after the Wall Street financial crisis, the nation’s largest megabanks have grown by more than $1 trillion in assets due to government support and its distortionary impact on market competition. The government too-big-to-fail subsidy for megabanks is worth an estimated $83 billion per year, according to Bloomberg View, offering these firms a clear competitive advantage, fueling further industry concentration and increasing systemic risk. Meanwhile, Washington’s response to the financial crisis of stricter banking regulations too often affects even the low-risk community banks that did not cause the crisis and pose no systemic threats, posing disproportionate burdens on these institutions and the communities they serve.

In its statement, ICBA noted that it is open to considering any constructive proposal to address the too-big-to-fail problem, including the contributions of the hearing’s witnesses—Federal Reserve Bank of Dallas President and CEO Richard Fisher, FDIC Vice Chairman Thomas Hoenig, Federal Reserve Bank of Richmond President and CEO Jeffrey Lacker and former FDIC chairman Sheila Bair. ICBA noted that it also has endorsed the Terminating Bailouts for Taxpayer Fairness (TBTF) Act (S. 798), introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), which would require the largest and riskiest banks to hold more leverage equity capital to reduce their risks and avoid future taxpayer bailouts. The association also advocated its Plan for Prosperity legislative agenda to offset the growing regulatory burden on community banks and their customers caused by the fallout of too-big-to-fail.

For more information on too-big-to-fail, to read ICBA’s “End Too-Big-To-Fail” white paper or to view ICBA’s “Turn Up the Heat, End Too-Big-To-Fail”video, visit

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