The Independent Community Bankers of America told the House Financial Services Committee on Wednesday that the small number of too-big-to-fail banks threatens the safety of the U.S. financial system.
The ICBA told the committee that a more diverse financial system would serve to promote innovation and competition, as well as reduce risk.
“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,” the ICBA said. “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.”
Additionally, the ICBA said in its statement that it would consider all constructive proposals to address America’s TBTF problem, including plans from some of the witnesses at the hearing: Dallas Federal Reserve President and CEO Richard Fisher, FDIC Vice Chairman Thomas Hoenig, Richmond Federal Reserve President and CEO Jeffrey Lacker and former FDIC chairman Sheila Bair.
The ICBA told the committee that it endorses a plan set forth by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), the Terminating Bailouts for Taxpayer Fairness Act, which would require the largest and riskiest institutions to hold additional equity capital to reduce risk to the financial system.