Washington, D.C. (July 9, 2013)—The Independent Community Bankers of America® (ICBA) today released this statement following the FDIC board of directors’ vote advancing a proposed rule to require higher supplementary leverage ratio capital standards on large financial institutions and an interim final rule to implement Basel III regulatory capital standards.
“To ensure that our economy truly operates under free market principles, it’s essential that we rein in the largest too-big-to-fail financial institutions so that our financial system is adequately capitalized and better prepared for financial downturns. In keeping with this, ICBA strongly supports regulators’ proposed rule to implement enhanced supplementary leverage ratio capital standards on the largest and riskiest financial institutions. The proposal would significantly increase capital requirements on the too-big-to-fail financial institutions that pose the greatest risks to our financial system.
“In particular, this rule will target the risky financial instruments that the largest institutions keep off their balance sheets. This will offer a clean, common-sense way to help offset the true level of risk that these megabanks pose to themselves, to consumers, and to our financial system and economy as a whole. While not a panacea, this is a positive step that would go a long way towards helping to safeguard our economic system.
“It’s safe to say that the bipartisan Terminating Bailouts for Taxpayer Fairness Act of 2013 (TBTF Act, S. 798) was a key factor in galvanizing the discussion about capital ratios for too-big-to-fail banks. Introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), the legislation would help eliminate the threats posed by too-big-to-fail financial institutions by requiring the largest and riskiest banks to hold more leverage equity capital to reduce their risks and avoid future taxpayer bailouts. We appreciate the effort put forth by Sens. Brown and Vitter to advance the debate over higher leverage ratios.
“The proposed rule introduced today supports ICBA’s longtime call for policymakers to take a tiered approach to regulation that distinguishes low-risk and highly capitalized community banks on Main Street from the large and risky financial firms of Wall Street. ICBA and community bankers nationwide strongly urge regulators to continue their efforts to advance the supplementary leverage ratio to support a more stable financial environment.”
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.