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: Megabanks Admit to Ditching Local Communities

Mar 21, 2019
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Washington, D.C. (March 21, 2019)—Independent Community Bankers of America® (ICBA) President and CEO Rebeca Romero Rainey issued the following statement on today’s Bank Policy Institute report on banking industry deposit growth.

“In today’s Bank Policy Institute report, the nation’s largest financial institutions admit something the rest of us already knew—they are profiting by withdrawing from Main Street communities. Unfortunately for many parts of our country, the local communities hit hardest by the fallout of the Wall Street financial crisis are being left behind by the entities that caused the calamity and the years-long recession that followed.

“While these megabanks congratulate themselves for a century of banking consolidation that has resulted in institutions that are too big to fail due to the systemic risks they pose, community banks are busy adding new bank offices to meet the needs of local communities. Community banks added more than 700 offices between June 2017 and June 2018, whereas noncommunity banks shrunk by 384 offices over the same period, according to the Federal Deposit Insurance Corp. Meanwhile, community bank loan growth has exceeded growth at noncommunity banks for six consecutive years, reflecting their success at fostering economic development in these communities.

“The continued success of community banks is due in no small part to their embrace of new technologies alongside the high-quality, relationship-based customer service for which they are known. Community banks use widely available technology platforms to offer the products and services their customers need, and they are increasingly partnering with and investing in innovative financial technology companies to transform the banking system. Through it all, community banks operate within the strenuous regulatory requirements often provoked by the misbehavior of the megabanks and the economic fallout they have all too frequently caused.

“As the only physical banking presence for one in five U.S. counties, the nation’s community banks will continue their work in fostering economic vitality in every corner of every community, whether urban, suburban or rural.”

About ICBA

The Independent Community Bankers of America® creates and promotes an environment where community banks flourish. With more than 52,000 locations nationwide, community banks constitute 99 percent of all banks, employ more than 760,000 Americans and are the only physical banking presence in one in five U.S. counties. Holding more than $4.9 trillion in assets, $3.9 trillion in deposits, and $3.4 trillion in loans to consumers, small businesses and the agricultural community, community banks channel local deposits into the Main Streets and neighborhoods they serve, spurring job creation, fostering innovation and fueling their customers’ dreams in communities throughout America. For more information, visit ICBA’s website at www.icba.org

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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