July 25, 2023
As the only national trade association that exclusively represents the nation’s community banks, ICBA often stakes out policy views other groups don’t. Organizations representing larger financial institutions frequently take nuanced positions on issues that don’t represent the best interests of community banks.
This distinction was clearly visible in industry comments on the Federal Deposit Insurance Corporation’s proposed special assessment. While ICBA strongly endorsed the agency’s proposed community bank exemption and methodology for determining a special assessments deposit base, groups representing larger banks were neutral on the agency’s approach to calculating an assessment base or outright opposed to the agency’s methodology.
Continuing Our Staunch Support for the FDIC’s Community Bank Exemption
In ICBA’s comment letter on the proposed rule, we expressed emphatic support for the FDIC’s proposal to exempt community banks with less than $5 billion in uninsured deposits from its special assessment following the failures of Silicon Valley Bank and Signature Bank of New York. We urged the FDIC to finalize the rule as proposed and applauded the agency for using an assessment base that will result in no special assessments for any community bank with less than $5 billion in assets.
From the community bank perspective, the position is simple. Exempting the vast majority of community banks from the FDIC’s special assessment and tying assessments to applicable financial institutions’ estimated uninsured deposits is clearly in line with ICBA’s calls for the agency to ensure community banks do not bear financial responsibility for large bank failures.
The FDIC proposal is consistent with everything ICBA has consistently advocated since the SVB failure in March, when we pledged to vehemently oppose requiring community banks to pay for the risky and costly practices of large banks like SVB. In a follow-up letter to FDIC Chairman Martin Gruenberg in April, ICBA said community banks should not be held responsible for the speculative practices of large financial institutions that are the chief beneficiaries of the FDIC’s receiverships.
Community Banker Grassroots Outreach Says It All
While groups representing larger institutions have raised concerns about the FDIC’s methodology and called on the agency to ensure its proposal does not set precedent for future special assessments, community bankers have joined ICBA in supporting the plan.
In recent weeks, ICBA has encouraged community bankers to submit comment letters to the FDIC on the proposal. Of the roughly 232 letters submitted to the FDIC on its special assessment proposal, more than 80 percent came from community bankers who are ICBA members. Every single one of these unique comment letters support the proposal, showing once again the collective ability of community bankers to rise to the challenge and make their individual voices heard.
Individual Voices Matter
Washington must continue to distinguish the large banks that pose systemic risk to the financial system from the thousands of local community banks that continue to appropriately manage risk and do right by their customers and communities. To ensure success, ICBA will continue representing community banks—and only community banks—as we work with policymakers on Washington’s response to the large bank failures.
As we move forward in support of the FDIC’s special assessment policy, know that ICBA has your back, community bankers. We won’t waiver and we will not take nuanced or neutral positions on the issues that matter the most to you because we have one mission at ICBA—to create and promote an environment where community banks flourish.