Community Bankers Support Obama Two-Tier Regulatory Reform

The Independent Community Bankers of America, an organization that represents the largest constituency of community banks in the nation, has come out in strong support of the Obama Administration's new regulatory fee structure.  The new structure places the greatest financial burden for oversight directly on the largest banks that require greater manpower due to size and complexity of financial transactions.

"ICBA is pleased that the Obama administration supports our nation's more than 8,000 Main Street community banks by recognizing that they are common-sense lenders that didn't participate in the risky practices that led to this financial crisis, and therefore, should not bear the burden for costs associated with new regulations and reforms. Instead, financial institutions that pose significantly more risk to our nation's economic system should pay for costs associated with more rigorous regulation and oversight. ICBA fully supports the concept of a two-tier regulatory fee structure. If a firm chooses to engage in risky activities, or if it becomes so large that its instability presents a risk to the entire financial system, the firm should pay fees commensurate with the risk it poses."To further protect America's taxpayers and the integrity of our economy, ICBA also calls on the administration to either downsize these mega-institutions or require them to divest sufficient assets so they no longer pose risks to the entire financial system.

"ICBA looks forward to working with the Obama administration and Congress on behalf of America's community banks and the communities they proudly serve to ensure that regulatory reforms make our nation's financial system even stronger than before the current economic crisis began."

Financial firms with less than $10 billion in assets and regulated through the federal system will see their rates lowered to match state rates.  In addition, unregulated consumer financial firms, such as mortgage lenders, would have to pay for their oversight for the first time.

The top financial firms are balking at the two-tier system, which also creates the new consumer financial protection agency.  "We think that it's outrageous to disproportionately and unevenly impose the cost of new regulation on the top banks," said Scott E. Talbott, the senior vice president of the Financial Services Roundtable. The largest banks "should not be forced by the government to . . . pay the larger share of the funding costs of the [consumer financial protection agency] and regulatory oversight."

Of course, his outrage over this "unfairness" should be tempered with his previously stated goals, or in his words, "sort of a dual goal." Mr. Bartlett said, "One is to support comprehensive reform, and the other is to kill the consumer financial protection commission."

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Tags: Consumer Financial Protection Agency, Finance Reform, financial services roundtable, icba, independent community bankers of america (all tags)


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