July 26 - Camden R. Fine, president and CEO of the Independent Community Bankers of America, has released the following statement in response to recent headlines about the need for too-big-to-fail financial institutions to be split up.
“There is a growing chorus of support for downsizing too-big-to-fail financial institutions, which enjoy implicit government support and continually put our nation’s taxpayers at risk. Splitting up these systemically risky financial firms will help restore discipline to the financial markets and prevent future crises, which would have a devastating impact on community banks and the communities they serve.
“Policymakers should examine the appropriate means to break up the largest and riskiest financial institutions to ensure they never again put the nation’s financial system, taxpayers and the economy in jeopardy. The risky financial practices of too-big-to-fail financial firms have had a negative impact on Main Street America. Their dangerous behavior has also led to a heavy and growing regulatory burden on community banks, which will continue so long as the nation’s taxpayers are at risk.”
Yesterday, Sandy Weill, former Citigroup CEO, made headlines for remarks about the need to break up too-big-to-fail institutions. Weill’s remarks are significant because he was instrumental in changing federal law to allow for mergers of commercial banks, investment banks and insurance companies. As CEO of Travelers Group, Weill worked with former Citicorp CEO John Reed to merge the companies in 1998 into what is now Citigroup. That merger pressured Congress to pass the Gramm-Leach-Bliley Act of 1999, which overturned a Glass-Steagall Banking Act of 1933 provision separating commercial banks from securities companies. Reed also has expressed regrets over the merger and policy change.
For more information about ICBA, visit www.icba.org.