“ICBA is pleased to unveil this comprehensive report, which is an excellent roadmap for helping everyone from consumers to policymakers understand how too-big-to-fail affects our nation’s economy and what they can do to help bring an end to this dangerous practice,” ICBA President and CEO Camden R. Fine said. “As we outline in the report, too-big-to-fail distorts free markets, incentivizes risky behavior, holds taxpayers hostage to bailouts, and creates unfair competitive advantages for the largest banks. But there is perhaps no greater reminder of the too-big-to-fail impact than the constant, oppressive regulatory burdens that community banks face on a daily basis. I encourage everyone who feels passionately about the health of our financial system to read this timely report.”
The report found that the 12 largest U.S. banks hold nearly 70 percent of all industry assets and that they get credit at rates “that do not reflect their true risk—rates that are subsidized by an implicit taxpayer guarantee.”
Additionally, the report pointed to a recent statement by Attorney General Eric Holder, in which he said the Department of Justice is aware that megabanks are TBTF. The report said the banking industry will increasingly become more concentrated as long as the problem of TBTF remains.
“Banks should exist to serve the economy, to provide the credit and other financial services that help launch and expand businesses and create new jobs,” ICBA said in the report. “A robust market for financial services helps consumers obtain home mortgages and other loans at competitive rates and on customized terms. When banks compete freely, consumers have access to a range of solutions for savings and investment.”
The ICBA expressed support for the Terminating Bailouts for Taxpayer Fairness Act, which was introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.).
“By taking bold steps to end [TBTF], the United States would be acting as a leader in global banking reform, and the increased safety and transparency of our banking system would make our banks more competitive globally, not less,” the ICBA said in the report’s highlights.