Our Position

Ending Too-Big-to-Fail


  • The continued growth and dominance of a small number of too-big-to-fail banks has led to an overly concentrated financial system, created unacceptable moral hazard and systemic risk, thwarted the operation of the free market, and harmed consumers and business borrowers.

  • ICBA supports legislative and regulatory measures that would curb or end advantages currently enjoyed by too-big-to-fail banks, and help mitigate the risk they pose to the financial system and economy. Such measures include higher capital and leverage requirements, enhanced liquidity standards, activity restrictions, concentration limits, limitations on the federal safety net, and more effective resolution authority.

  • ICBA supports the Federal Deposit Insurance Corporation’s (FDIC’s) and the Federal Reserve’s rules on contingent resolution plans and encourages the agencies to use the provisions of the Dodd-Frank Act requiring systemically important financial institutions (SIFIs) to divest their assets if they do not file credible plans.


Dominance of the Largest Banks. The greatest ongoing threat to the safety and soundness of the U.S. banking system is the dominance of a small number of too-big-to-fail megabanks. The megabanks have become even larger since the financial meltdown of 2008. In fact, the 12 largest US banks, just 0.002 percent of all US banks, account for 52.6 percent of industry assets, dwarfing the rest of the banking system and posing massive systemic risk.

Because these firms are too big to fail, they act with impunity and court risks that no smaller firm would tolerate. The markets offer them credit at rates that do not reflect their true risk—rates that are subsidized by an implicit taxpayer guarantee. In addition, large or interconnected institutions are too big to prosecute and their executives are too big to jail.

No banker should be above the law. The same prosecutorial standards and enforcement procedures must apply to community banks and megabanks alike. Many of these megabanks such as Wells Fargo are also too big to manage.

To address TBTF, we must both reduce the riskiness of megabanks to make it less likely they will fail in the first place and, when an institution is failing, ensure that tools are available to implement an orderly liquidation of the institution without causing a destabilizing systemic impact.

Enhanced Prudential Standards for Systemically Important Financial Institutions (SIFIs). ICBA generally endorses higher capital, leverage, liquidity standards, concentration limits, and contingent resolution plans for SIFIs. ICBA supported the requirement for a higher supplementary leverage ratio on the largest banks and their holding companies adopted by bank regulators. ICBA supports a significant capital surcharge on SIFIs and the imposition of total loss absorbing capacity (TLAC) and long-term debt (LTD) requirements on globally significant banks.

ICBA supported S. 2155 which increased the asset threshold at which certain enhanced prudential standards apply, from $50 billion to $250 billion, while allowing the Federal Reserve discretion in determining whether a financial institution with assets of $100 billion or more must be subject to such standards. S. 2155 also increased the asset threshold at which company-run stress tests are required from $10 billion to $250 billion and increased the asset threshold for mandatory risk committees from $10 billion to $50 billion.

FDIC as Receiver; “Funeral” Plans. ICBA supports the orderly liquidation rules of the FDIC and the provisions of the Dodd-Frank Act that provide a process for the appointment of the FDIC as receiver of a failing financial company that poses significant risk to the financial stability of the United States.

ICBA also supports the FDIC’s and the Federal Reserve’s rules requiring SIFIs to submit contingent resolution plans that enable the FDIC, as receiver, to resolve the institution under the Federal Deposit Insurance Act. It is essential that the largest financial companies submit credible contingent resolution plans that would facilitate a rapid and orderly resolution of the company and describe how the liquidation process could be accomplished without posing systemic risk.

If a company cannot submit a credible plan, the FDIC and the Federal Reserve should exercise their authority under the Dodd-Frank Act to order a divestiture of those assets or operations that might hinder an orderly resolution.

Staff Contact

Christopher Cole

Executive Vice President, Senior Regulatory Counsel

Washington, DC


Jenna Burke

Senior Vice President and Senior Regulatory Counsel

Washington, DC


Sep 30, 2020 | Letters to Regulators | NewsWatch Today | Testimony

Comment Letter Regarding DOJ's Bank Merger Competitive Review Guidelines

Apr 10, 2019 | News | Press Release

Community Banks Are the Megabank Alternative

Mar 5, 2019 | NewsWatch Today

Romero Rainey: Another Wall Street Tall Tale

Nov 29, 2018 | NewsWatch Today

Agencies Planning Resolution Reform: McWilliams

Letters to Regulators and Congress

Title Recipient Date
FDIC, Fed 01/23/23
DOJ 02/15/22
DOJ 09/30/20
USPS Office of Inspector General 08/26/20
U.S. Postal Regulatory Commission 08/24/20