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Community Bankers Call for Downsizing Mega-Banks


May 20 - The board of directors for the Independent Community Bankers Association of New Mexico (ICBA/NM) is calling for passage of a bill introduced in the U.S. Senate that will require the nation’s largest banks to increase their capital standards.

In a resolution supporting S. 798 (The Terminating Bailouts for Taxpayer Fairness Act of 2013), the ICBA/NM board states, “Too-big-to-fail financial institutions and non-regulated financial firms took on excessive risk outside normal banking endeavors ... and were in a large part to blame for the financial collapse in 2008, and were largely responsible for the massive amount of
regulation that has now been placed on all financial institutions including traditional community banks that were not responsible for this high-risk behavior ...”

ICBA/NM Chair Dion Kidd-Johnson, president, COO and CRO of Western Bank in Alamogordo, said the goal with S. 798, “is about changing the conversation regarding too big to fail from we should do something to we have to do something.” ICBA/NM member banks, Kidd-Johnson said, “are staggering under the weight of excessive regulation that was brought about by the Congress upon passage of the Dodd-Frank Act. Our members did not initiate or encourage the risky business practices that almost caused a total financial meltdown, but we are suffering the consequences.”

The legislation would impose a 15 percent capital standard on the largest banks and an 8 percent standard on midsize and regional banks, while community bank capital standards would remain at current levels. The bill also would limit the federal safety net to depository institutions. Further, S. 798 includes a variety of measures that would:

New Mexico’s congressional delegation has been asked to support the measure according to Jerry Walker, president and CEO of ICBA/NM. “We are hopeful that Senator’s Udall and Heinrich will sign onto the bill as co-sponsors,” Walker said. “Additionally, we have briefed our U.S. House members on the proposed legislation and asked them to watch for and support a House version — if one is introduced. We are very encouraged by their stated support for our community banks.”

In addition to sending the board resolution to the congressional delegation, the document has also been sent to the CEOs and senior management of New Mexico’s community banking industry with a message encouraging them to relay their support of S. 798 to New Mexico’s federal lawmakers.

ICBA/NM is the only trade association in New Mexico that solely represents the interests of community banks before the New Mexico Legislature and regulatory agencies. The ICBA/NM membership is comprised of 47 community banks holding more than $10.5 billion in deposits at 220 locations statewide and employs more than 2,300 New Mexicans.